The mortgage market is changing fast. FCA reforms are rewriting the rules, and technology is reshaping the way we borrow. Here’s what it means for advisers and borrowers alike.
Over a roast dinner last weekend, the conversation turned to housing — a familiar family debate. Our four grown-up kids (24 to 30) were around the table: three renting, one with a mortgage so big it makes your eyes water. She and her boyfriend are now realising just how much of their disposable income is being swallowed up by the monthly repayments.
It took me right back. My first mortgage? That beast gobbled up over 60% of my disposable income. We just about scraped together enough to buy a place, and even then, it felt like we were living on beans and toast for a decade. We even had a sunbed in the lounge for two years. But we did it. And now, decades later, it seems the wheel is turning again.
Because in the world of mortgages, as in life, what goes around really does come around
You see, the Financial Conduct Authority (FCA) has just shaken things up in the mortgage world. In July 2025, they rolled out a raft of reforms under the Mortgage Rule Review (MRR), all aimed at making home ownership more accessible — especially for the younger generation who’ve been locked out of the market since the 2008 crash.
Back then, the regulators slammed the brakes on lending, and for good reason. But now, with the government nudging for economic growth, the FCA has loosened the reins a little. And it’s about time.
So, what’s changed?
First off, remortgaging just got a whole lot easier. Thanks to an expanded Modified Affordability Assessment (MAA), if a borrower finds a cheaper deal with a new lender, they can switch without jumping through the usual hoops of a full affordability check. That’s a lifeline for anyone stuck on a pricey Standard Variable Rate (SVR).
Execution-only sales have also been simplified. Previously, the moment a customer had a chat with a lender, it triggered a requirement for advice. Now, as long as the customer makes a clear choice, clicks the button “I understand I’m not seeking advice”, they can go down the execution-only route. Only I hope we don’t continue calling it that – it sounds like a guillotine from the French Revolution.
What will then happen is that the app will present the customer with various options, accompanied by videos that explain everything, and AI will govern the journey. No advice, just options to make some choices from.
We’ll steer clear of the advice vs. non-advice bias; that’s a conversation we can have later. But for now, this is going to happen.
So, what exactly is this Modified Affordability Assessment (MAA)? In short, it’s a simplified check that focuses on whether the new mortgage is more affordable than the current one. No stress testing at higher rates, no full affordability test — just a common-sense approach. But don’t get too comfy — lenders still have to ensure the deal is suitable and identify vulnerable customers. And not every lender will offer this; it depends on their appetite for risk.
Looking ahead to 2026 onwards…
Looking ahead, the FCA is reviewing feedback from its Discussion Paper DP25/2, and more changes could be on the horizon. We’re talking about:
- Responsible lending reforms to help first-time buyers, the self-employed, and those with variable incomes.
- Later-life lending options for older borrowers.
- Tech innovation, like AI-assisted affordability checks and digital advice tools.
Oh, and let’s not forget the new permanent Mortgage Guarantee Scheme, which supports 95% loan-to-value mortgages — a big win for those struggling to save a hefty deposit. Additionally, lenders now have more flexibility to offer high loan-to-income (LTI) mortgages, which should stimulate some healthy competition.
So, back to that dinner table. As we finished our dinner, we reminisced about our own housing journeys. I couldn’t help but smile. Yes, times have been tough for young buyers. But maybe — just maybe — the tide is turning. The same way we once clawed our way onto the ladder with a hefty mortgage and a lot of grit, today’s generation might finally get their shot too.
Because in the world of mortgages, as in life, what goes around really does come around. So why don’t we bring out a crystal ball and see what’s next for mortgages as these FCA reforms bed in?
Here’s my take on what might be coming down the track
- Hyper-Personalised Lending. We’ve predicted this before, but now that banks have the green light to provide mortgages directly, their mortgage offers will become truly bespoke. AI-driven affordability models will pull data from open banking and spending habits to create tailored deals. Risk-based pricing will reward stability, even for those with non-traditional income streams, such as freelancers or gig workers.
- Smartphone-Powered Mortgage Journeys. My eldest daughter will love this one. The mortgage process will live in your pocket. End-to-end digital journeys will dominate, with slick apps offering guided self-service, explainer videos, and biometric ID checks. Voice assistants, AI Coaches and chatbots will handle routine queries.
- Flexible Lending Meets Mansion Tax. Taxing properties valued at more than £2 million is only the start, as governments realise they can extend this tax to lower-priced properties with little kerfuffle. Most owners will pay the tax in instalments alongside their council tax, but some asset-rich, cash-poor customers will struggle. Expect innovative payment options, aka Klarna. The UK government may well turn this into a second-charge payable on death, making equity release solutions a practical way to manage these liabilities. Expect a surge in later-life lending.
- Big Tech and Subscription Mortgages. Now that the advice compulsion has been shaken off, the mortgage market won’t be the exclusive domain of banks. Big Tech players could enter the fray, partnering with lenders to offer mortgages via your favourite shopping or streaming app.
- Premium Human Services. Digital convenience will rule for mainstream borrowers, but human advice is far from dead. In fact, I’m going to call it a premium offering. Clients with complex needs — specialist lending, later-life borrowing, protection, tax planning, pension planning — will pay for bespoke, adviser-led interaction. In Megatrends (1982), published over 45 years ago, John Naisbitt introduced the idea that as technology accelerates, people seek deeper human connection — a principle he called “high tech, high touch”.
As we cleared the plates and pondered dessert, one thing was clear. The mortgage market is moving at breakneck speed. Advisers who fail to upskill risk being left behind. For me, that means launching my Later Life Advice Practice in Edinburgh — because the future belongs to those ready to evolve.
