The Financial Conduct Authority said it is exploring reducing the ‘regulatory burden’ on mortgage borrowers, signifying that mortgage affordability rules could be loosened.
After the Global Financial Crisis a wave of mortgage regulation came into force, bringing in strict mortgage stress tests that made sure people could afford to repay their loans even if interest rates increased.
However it’s thought that the rules went too far, pushing some perfectly safe borrowers out of the market.
Nikhil Rathi, chief executive of the FCA, said it wants to “open a discussion” to simplifying mortgage requirements.
The aim is to “Begin simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults.”
Matt Smith, mortgage expert at Rightmove, said: “It is really encouraging that the market regulators are now considering what a review of mortgage affordability could look like.
“Regulatory change is what we’ve been calling for, as that is what is needed to truly impact home-mover affordability, particularly for first-time buyers.
“We’ve seen some innovative products and schemes announced by lenders to try and do their bit to support home-buyers, but they need support from both the government and regulators to really drive more options for people.”
PropertyWire explores the regulatory rules that could change.