The FCA has decided it’s time to take another look at how mortgage lending works in the UK — or doesn’t, depending on who you ask.

A new discussion paper has landed, and it’s essentially the regulator asking: “Is the current system doing enough for people trying to buy a home — especially first-time buyers, older borrowers, and the self-employed?” Spoiler: probably not.

They’re exploring whether current lending rules are still fit for purpose in a world where work and life don’t look like they used to. Jobs-for-life are rare, and more people are juggling contracts, gig work, or running their own business — and that makes mortgage applications far trickier than they need to be.

One area getting attention is the so-called “responsible lending” rules. These were beefed up after the 2008 crash (with good reason), but now there’s a debate over whether they’ve become too rigid, locking some people out of home ownership even when they can clearly afford the repayments.

There’s also a growing focus on lending later in life. With retirement savings falling short for a lot of people, more homeowners are likely to need to tap into their property wealth to stay afloat in their 60s and beyond. But borrowing past 60 can still be expensive and unnecessarily complicated — even though some lenders are already happy to include income up to age 75 in their affordability checks.

Jim Boyd from the Equity Release Council summed it up well: older borrowers aren’t niche anymore — they’re mainstream. In 15 years, half of all UK households will be over 50. If we don’t build better products and clearer advice around this, a lot of people are going to be stuck between a rock and a very expensive mortgage.

The FCA is also toying with the idea of loosening stress testing — the bit where lenders have to imagine what happens if rates jump a few percentage points. That test is there for good reason, but maybe it could be more flexible depending on the borrower’s situation.

And while we’re at it, there’s talk of:

• Longer-term fixed rates
• More flexible repayment options (like part interest-only)
• Alternative affordability checks, such as basing borrowing power on what someone’s already paying in rent (which often exceeds what a mortgage would cost — go figure)

Rightmove’s Matt Smith welcomed the discussion, pointing out that renters are now paying, on average, 41% more than they were five years ago. So the idea that they can’t “afford” a mortgage — even if their monthly outgoings would drop — feels increasingly out of touch.

There’s also a regional angle. The earnings-to-house-price gap is brutal in the South but slightly more manageable in places like Scotland, Wales, and the North. Any new rules need to recognise that affordability isn’t a one-size-fits-all issue.

To their credit, the FCA isn’t rushing to rewrite the rulebook just yet. This is more of an open call to the industry to say: tell us what’s not working, and let’s see what we can do about it.

Will it lead to major changes? That remains to be seen. But even having the conversation is a step forward. Mortgage lending needs to evolve — not just to make home ownership more accessible, but to reflect the way people actually live and work today.

Bottom line? If you’re self-employed, over 50, or a first-time buyer stuck on the sidelines, this could be the start of something useful. But don’t expect an overnight fix — regulators aren’t known for their speed.

More to follow on this one.  I need to read the 72 page paper in more detail.