Preparing for the future mortgage market

Thinking of applying for a mortgage in the near future? It’s worth reading up on how the UK mortgage landscape could change.

In November 2025, the Financial Conduct Authority (FCA) published a forward-looking speech by its chief exec, Nikhil Rathi, that focuses on building ‘the mortgage market of tomorrow’.

The changes discussed aren’t just tweaks to interest rates or product terms – the FCA is pushing for a broader, more fundamental shift. Here’s what you need to know.

A mortgage market in transition

Rathi says that the current market is, in many ways, working. There are more than 7,000 mortgage products available – almost a record – and despite high house prices, first-time buyers are still entering the market.

But at the same time, economic pressures, demographic shifts, and changing employment patterns are reshaping people’s financial lives. The FCA argues the mortgage market must evolve too – not just for today’s borrowers, but for the generations to come.

That’s why the FCA launched its Mortgage Rule Review in 2025, with the aim of building a market that makes sustainable homeownership accessible to more people.

What’s already changing

More realistic affordability assessments

One of the most immediate outcomes of the review has been a shift in how lenders assess affordability. In March 2025, the FCA clarified that alternative methods – beyond traditional stress-testing – could be used to evaluate whether a borrower can afford a mortgage.

By adopting these approaches, many lenders were able to extend larger loans – on average around £30,000 more than before. In the months since, mortgage approvals for home purchases have remained strong, with over 65,000 approvals in September 2025 – the highest rate since December 2024. According to property consultant Savills, these changes could boost first-time buyer transactions by up to 24% over the next five years.

Meanwhile, the Bank of England’s Financial Policy Committee, working alongside the FCA and PRA, updated guidance on high loan-to-income lending – potentially helping an additional 36,000 first-time buyers a year.

What it means for you: If you’re currently saving for a deposit or getting your finances in order, these revised affordability approaches could make it easier to get on (or move up) the property ladder – particularly if you have a modest deposit or moderate income.

Who’s still underserved – and potential solutions

The FCA also states that not everyone benefits equally from the current system. In its discussion paper, feedback revealed that certain groups still find it particularly hard – or expensive – to get a mortgage. This includes people who are:

• Self-employed or with irregular income.

• Lacking a large deposit or family support.

• Recovering from a negative financial event.

• Using overseas income or assets.

• Impacted by minor blips in their credit history.

Without changes, many of these people may end up renting for longer. And the FCA projects that the proportion of people renting into retirement could more than double by 2041 – meaning those individuals may need hundreds of thousands more in pension savings than homeowners.

What is the FCA considering?

• Interest-only mortgages (or partial interest-only) – not as a mass-market product, but potentially as one tool to help buyers who expect their income or situation to improve.

• Low-start lending – perhaps offering reduced payments in early years, easing households into homeownership.

• Using pension savings to help buy a home – or even a proposed ‘Citizen’s Advance’ on the state pension. While bold, these ideas signal a willingness to think beyond traditional mortgage models.

But the FCA also states that these come with risks. Any new path would need strong product design, good advice, and transparent communication – especially about long-term affordability.

Innovation is coming: data, tech, and smarter underwriting

Another major theme in the FCA speech is innovation, especially when it comes to how lenders assess risk. Traditional underwriting often relies heavily on credit history. But what about people with non-standard income, or those new to the credit system? The FCA points to some early signs:

• Experian recently expanded its credit-scoring model to include rental payment data.

• A fintech lender managed to boost approvals for self-employed borrowers by around 20% – by using real-time account data instead of just a credit file.

• Overseas, US firm Upstart has used machine learning and 1,600+ data points (many non-traditional) since 2014 to underwrite people with limited credit history.

The FCA is actively supporting this kind of innovation, including an ‘AI sandbox’ and a three-month Mortgage TechSprint to encourage smarter, fairer underwriting.

What it means for you: If you’re self-employed, have irregular income, or lack a long credit history, you might find it easier to qualify in future as lenders begin to consider broader, more relevant data.

Later-life lending and the rise of housing wealth

One of the most significant long-term shifts the FCA highlights is the role of housing equity in later life. People are carrying mortgage debt for longer, and fewer may own homes outright. Some key points:

• Around 43% of people are projected to be under-saving for retirement – and this projection assumes homeownership.

• The FCA argues the mortgage market should enable housing wealth to be unlocked when it makes sense – for care needs, retirement, or other later-life expenses – but at fair value.

• This could take the form of more flexible lifetime or retirement mortgages, but it requires high standards of advice and better integration with pensions and investments.

The regulator is even asking whether all mortgage advisers should be able to advise on lifetime products, or whether a more streamlined, cross-sector approach is needed.

What you can do now – preparing for the future

Whether you’re a first-time buyer, a renter, or are simply considering future plans, the coming changes offer both opportunity and uncertainty. No matter how the mortgage market changes, it’s crucial that your credit health is as good as it can be before you apply.

At Checkmyfile, we provide the most detailed credit report you can get. It puts your info from the UK’s three main credit reference agencies – Experian, Equifax, and TransUnion – in one place. You see everything a lender could see, can spot any issues early on, and identify actionable steps to improve your credit score.

Start with a 7-day free trial. It’s then a paid monthly subscription – cancel online anytime.