Borrowers will find it easier to remortgage under changes announced by the Financial Conduct Authority (FCA), in a package of measures designed to help people navigate their financial lives and support economic growth.
The measures are part of a series of reforms the regulator is undertaking to ensure more people can benefit from choice in the mortgage market and the security of homeownership.
Under the changes, borrowers will find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of repayment extending into retirement. Remortgaging with a new lender will become easier, providing easier access to cheaper products, and borrowers will be able to discuss options with their mortgage provider and receive advice when they need it.
The FCA expects many borrowers to continue to benefit from regulated mortgage advice. Lenders are expected to consider what is appropriate to identify consumers who need advice or other support.
Emad Aladhal, director of retail banking at the FCA, said:
“We are helping more people navigate their financial lives by supporting those who can afford to buy a home and supporting competition in the mortgage market. Consumer needs have changed over recent years, and our rules are changing too. Today’s changes support growth by simplifying some of our rules, saving consumers time and money, while ensuring they still benefit from advice, where needed.
“We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers. These reforms are another significant step in our mortgage rule review, which we’re delivering quickly. They are supported by the strong protections we’ve already put in place for consumers in the mortgage market.”
As part of the changes, the FCA is also removing guidance that is no longer needed to reduce the regulatory burden. ‘Reform of the mortgage market is possible because of the high standards set by the FCA’, the organisation said.
“These include effective affordability checks, support for those who get into financial difficulty and the Consumer Duty, which requires lenders to achieve good outcomes for borrowers.”
The changes are voluntary for firms, but the FCA stresses that supporting sustainable home ownership and a competitive mortgage market is a collective responsibility. ‘The FCA is playing its part and is encouraging firms to use these flexibilities to help broaden access, strengthen competition and support greater innovation and choice for consumers’, it said.
