Speaking at the Building Societies Association (BSA) conference in Birmingham, Emad Aladhal, director of retail banking at the FCA, said: “We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage.
“These proposals can allow lenders greater scope to innovate and develop their own approaches to deliver good outcomes, and in doing so, empower borrowers to make the right choices for their mortgage.”
He added that this was “only a first step” and in June, it would “open a discussion on the future of the mortgage market and conduct regulation”.
“It will take a truly collective effort on the part of lenders, our fellow regulators, government, developers and others to tackle the structural challenges facing the UK’s current housing market.
“To make the changes meaningful, we need the industry to take up the gauntlet of innovation, to use the flexibility we aim to create, to make meaningful progress for our communities,” he said.
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The speech comes after the FCA released its Mortgage Rule Review earlier today, which had several suggestions to make it easier for consumers to talk about their options, cut their mortgage terms and secure cheaper products for remortgage.
Aladhal explained: “Our Mortgage Rule Review stems from our new five-year strategy. In our strategy, we set out our objectives to support growth and help consumers navigate their financial lives.
“We have shown that, by rebalancing risks, we can lead efforts to unlock investment and growth. Our recent statement on the interest rate stress test has already prompted several firms to embrace the flexibility in our rules, ensuring more borrowers can access affordable mortgages.”
Several lenders have lowered their stress tests in the past few weeks, including Accord Mortgages, NatWest, HSBC and Lloyds Banking Group.
Aladhal said homeownership was increasingly becoming a challenge for people and this risked their long-term financial resilience.
This is also a concern as more consumers are borrowing into later life, so the regulator wants to make sure the sector is ready to support customers with whatever options they require.
Aladhal said there have been improvements in mortgage lenders’ conduct standards, and default rates were still historically low.
He continued: “In this industry, there is now a strong culture of responsibility and prudence and customer support, which has paid enormous dividends. Despite the cost-of-living crisis and a sharp interest rate correction, mortgaged household finances have remained remarkably resilient.
“But this isn’t just about the first rung on the ladder; we need a market that can serve everyone.”
