UK Finance has submitted its formal response to FCA CP26/18 Mortgage Rule Review.

Targeting interest-only lending rules in particular, the consultation proposes updates to the UK mortgage framework to expand access for first-time buyers and creditworthy, underserved consumers.

UK Finance and its members welcome the FCA’s direction of travel. Crucially, members support the permissive nature of the proposed measures, viewing them as a constructive step toward a more proportionate, flexible, and outcomes-focused mortgage market.

Increased flexibility could particularly benefit group segments such as self-employed borrowers, where the share of first-time buyers has fallen under the current rules.

While Consumer Duty provides a solid foundation, lenders need clear and proportionate regulatory guidance to apply these flexibilities with confidence – expanding market access while avoiding a repeat of historical interest-only risks.