First-time buyers could soon find it easier to step onto the property ladder under proposals to relax mortgage rules, as financial regulators explore ways to enable “responsible risk-taking” among borrowers.
The Financial Conduct Authority and other watchdogs are understood to be considering adjustments to existing lending guidelines, potentially allowing banks and building societies greater flexibility in offering loans with smaller deposits. Current regulations cap how many mortgages lenders can issue above 4.5 times a borrower’s annual salary, and enforce strict affordability tests to ensure borrowers can cope with possible interest rate rises.
Banks are also pressing the Bank of England to reduce the amount of capital they must hold in reserve for high loan-to-value mortgages, which would open the market further to first-time buyers. According to industry experts, many prospective homeowners are locked out by rigid lending criteria, even if they can comfortably afford monthly repayments.
At the same time, payment regulators may ditch the existing £100 limit on contactless transactions, allowing card providers to set their own ceilings for tap-and-go payments. This would bring greater ease for consumers making larger purchases, reflecting increasing demand for more flexible payment methods.
The moves come in response to the chancellor Rachel Reeves’s call for regulators to show a “pro-growth agenda” following her meeting with the Competition and Markets Authority, the Environment Agency, and others at the Treasury on Thursday. Reeves emphasised the need for a “mindset shift on regulation” to stimulate the economy “instead of excessively focusing on risk”.
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