The Financial Conduct Authority (FCA) is reviewing the rules that govern whether a mortgage application is successful or not, and could consider making the rules less stringent, says a ThisIsMoney.co.uk article from December 2016.
Three years ago, after the FCA Mortgage Market Review, tougher lending rules were introduced that made it more difficult to get a mortgage. They included requiring borrowers to produce written evidence about their monthly income and expenses. This was to satisfy the lender that the borrower could afford the monthly mortgage repayments. These rules made it particularly difficult for the elderly and self-employed to obtain a mortgage or switch mortgages.
Elderly people must prove that they have a guaranteed income when they retire, and this is difficult if their income is based on investments that can rise and fall in value.
The FCA is concerned that the tough borrowing rules are making it more difficult for the self-employed to prove their income and expenditure than those in employment.
The rules may also be restricting the types of documents that can be used as evidence of income and expenses.
A spokesman for the FCA recognised that their rules could be restricting more flexible mortgages and said:
“We will consider whether our rules may be limiting innovation that would be to the benefit of consumers.”
The FCA is also looking at what advice borrowers need before applying for a mortgage, which can include mortgage protection insurance advice, and is expected to present its preliminary findings in the summer of 2017.