The changes follow Chancellor Rachel Reeves’ Leeds Reforms announced last week

The Financial Conduct Authority (FCA) has announced changes to mortgage lending rules which will make it easier and cheaper for borrowers to remortgage. 

The changes are part of a series of reforms the regulator is undertaking to mortgage rules and are an acknowledgement that “consumer needs have changed”.

Under the FCA’s changes, existing borrowers will find it easier to reduce their mortgage terms. Currently many mortgage holders are subject to penalties if they over-pay their mortgages or seek to end them early.

The FCA’s new rules also seek to make it easier to remortgage with a new lender, helping homeowners access cheaper products.

News of the FCA’s changes follow Chancellor Rachel Reeves’ announced “Leeds reforms” from last week, in which she signalled her intention to relax mortgage rules to boost growth. 

Under the current Bank of England rules, mortgage lenders can originate new loans with a loan-to-income (LTI) ratio of 4.5 or higher to no more than 15% of their total number of new mortgages each year.

>>See also: Reeves set to relax mortgage lending rules to boost homeownership

Following Reeves’ remarks, this rule looks set to change with more mortgages being made available at higher income multiples. 

Emad Aladhal, director of retail banking at the FCA, said: “Consumer needs have changed over recent years, and our rules are changing too. Today’s changes support growth by simplifying some of our rules, saving consumers time and money, while ensuring they still benefit from advice, where needed.    

“We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers. These reforms are another significant step in our mortgage rule review, which we’re delivering quickly. They are supported by the strong protections we’ve already put in place for consumers in the mortgage market”.  

The FCA said it outlined its changes in a letter to the Prime Minister earlier this year. The changes are part of its five-year strategy. 

As part of its wider mortgage rule review, the FCA has also opened a consultation on the future of the mortgage market. The consultation ends on 19th September 2025.