The United Kingdom’s Financial Conduct Authority (FCA) has announced plans to investigate ways of simplifying rules regarding mortgage lending to boost access to home ownership. The current regulations, introduced following the 2008 financial crash, require lenders to ensure that borrowers can afford their mortgages, testing them against higher rates of interest. The FCA is to question whether the rules are too stringent given current levels of defaulting and missed repayments.
The watchdog will also consider the potential removal of limits on contactless card payments. Such limits, currently set at £100, may soon become a thing of the past should the FCA decide to permit providers to set their own terms along the lines of current digital wallets.
Lenders have welcomed the FCA’s proposals, noting that the existing rules are affecting affordability not only for first-time buyers but also for those attempting to climb the housing ladder. However, critics have warned that relaxing the rules risks repeating the mistakes of the past.
In December, UK Prime Minister Sir Keir Starmer, Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng wrote to the main financial regulators requesting recommendations regarding reform that could boost economic growth. The deadline was set for mid-January, with the FCA’s responses are among several programmes already planned to promote growth
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