First-time buyers and self-employed borrowers could benefit from more flexible mortgage lending rules from late next year, following confirmation from the Financial Conduct Authority (FCA).

Estate agents have welcomed the FCA’s proposals, which aim to introduce greater flexibility into mortgage lending as part of broader plans to support underserved groups, including first-time buyers and the self-employed.

The regulator has been reviewing mortgage rules throughout 2025 amid concerns that high interest rates and strict affordability requirements are preventing many people from purchasing a home. The FCA is now preparing to consult early next year on a package of measures designed to improve access to home ownership.

Proposals under consideration include greater flexibility around loan-to-income limits, a broader approach to acceptable repayment vehicles for interest-only mortgages, and ensuring that rental payment histories are taken into account when tenants apply for a mortgage.

David Geale, Executive Director for Payments and Digital Finance at the FCA, said: “We have worked at pace this year to improve outcomes for customers seeking a mortgage. We will continue to use insight from consumers and industry to drive further reforms and rebalance risk, helping to widen access to affordable mortgages that meet the needs of today’s consumers.”

Commenting on the proposals, Dominic Agace, Chief Executive of Winkworth, said: “Reform is welcome. The technology now exists to take a more bespoke approach to mortgage lending, accommodating the growing self-employed sector, an individual’s financial track record and the property they are buying.

“With improved data, borrowers should no longer be forced into ill-suited mortgage categories simply to fit rigid criteria. This will allow more people to borrow responsibly within their capabilities, helping them secure homes that meet their family’s needs. It should also encourage entrepreneurship by ensuring self-employment is not a barrier to home ownership.

“I also welcome greater availability of interest-only mortgages. With the right deposit and the right property, they can be a valuable tool, offering lender comfort while allowing borrowers to use their capital more efficiently, particularly where downsizing later in life is the most likely route to repayment.”

Mary-Lou Press, President of the National Association of Estate Agents, said that increased flexibility for first-time buyers, the self-employed and those with non-traditional or later-life incomes could unlock home ownership for groups that have historically been underserved.

She added: “Simplifying rules, modernising affordability assessments and responsibly embracing innovation—such as the use of rental payment data and AI-driven advice—could make a meaningful difference, provided strong consumer protections remain in place.

“The fact that the vast majority of mortgages remain out of arrears shows the system is fundamentally robust, while also demonstrating there is scope to widen access carefully without increasing risk. As affordability pressures ease and lenders adapt following changes to stress testing, reforms should be introduced in a measured way, supported by clear advice and transparency. Ensuring consumers fully understand their options, particularly around interest-only, part-repayment and later-life lending, will be essential to supporting sustainable home ownership now and in the future.”