Speaking at the UK Finance annual lunch this week, Aladhal said the journey of homeownership was long and, despite improvements to the process, was getting longer because of affordability constraints.
“We want to help make that journey easier, and bring the promise of a first home closer to more people’s grasp,” he added.
Aladhal said the regulator could have this discussion about broadening access to homeownership because of how far the mortgage market had come regarding responsibility and prudence.
He said the mortgage market was “more resilient” and “safer”, pointing to the low number of possessions and the help provided to customers in financial difficulties.
How to get your first-time buyer clients mortgage ready
Sponsored by Halifax Intermediaries
‘Creditworthy’ people struggle to access mortgage market
However, Aladhal said it was a market that “some creditworthy people can struggle to access”, adding that more people were borrowing for longer and into later life, especially those without access to the Bank of Mum and Dad.
He added: “Has safety come at the expense of access to creditworthy borrowers? Has the right balance been struck? Could we do more to unlock investment and growth – and in doing so, encourage a more dynamic market, with a wider range of products that meet consumers’ needs?”
Aladhal said: “It’s clear that access to our housing and our mortgage markets is becoming a key detriment to long-term financial resilience. Improving people’s lives is the core outcome of the FCA’s new five-year strategy.
“To do that, we believe we need to look again at the risk of regulation, what regulation should allow in the current environment. Learning from the past, but not being hostage to it.”
Aladhal said some lenders had already reacted positively to its announcement that they could be flexible with stress testing.
Collaborative reform, innovation and flexibility
Aladhal said the regulator was “listening carefully” regarding how to make the mortgage market more innovative and accessible, and said it would take a collective effort from stakeholders in the sector.
More innovation and use of flexibility is also needed, Aladhal said, such as looking at other financial products like a pension or savings.
He said: “Individuals don’t look at mortgages in isolation of their wider financial wellbeing, nor do we.”
Aladhal said “helping people achieve the dream of homeownership” depended on helping people develop saving habits, having the right tools to budget better and having access to information.
He continued on to say “unlocking innovation in the mortgage market” was important and there was a “willingness to rebalance risks” to enable this.
Addressing the lenders in the room, he said: “We want your views on how we do this. And we want your engagement and willingness to embrace the flexibility we can provide.”
He said the FCA stood ready to support lenders with innovation, exploring new ventures and reviewing practices.
“We cannot do this alone. Reforms to conduct regulation will only ever be one part of the answer,” he added.
