UK financial watchdog consults on steps to simplify mortgage rules

LONDON (Reuters) -Britain's Financial Conduct Authority is seeking feedback on a potential overhaul of mortgage issuance and advice rules, with a view to simplifying responsible lending guidance and stimulating demand in the 235 billion pound ($315 billion) market.

"We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage," the FCA said in a statement on Wednesday.

"Doing so will help consumers better navigate their financial lives and support growth, both priorities in our new strategy," it continued.

The watchdog is under pressure from the government to streamline and relax financial regulation where possible in order to help Britain's banks, asset managers and insurers compete more strongly with international rivals, and maintain London's position as home to Europe's biggest financial hub.

The regulator has already reminded firms of the flexibility in its rules to help people access a mortgage, and it plans to follow this work with a further public discussion on the future of the mortgage market in June.

That study is expected to include consideration of risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending in later life and consumer information needs.

British house prices rose at their fastest pace in more than two years in the 12 months to February, the Office for National Statistics said on April 16.

Average house prices rose by an annual 5.4% to 268,000 pounds in February, as buyers rushed to take advantage of tax incentives on purchases of less expensive homes before those incentives expired in April.

Speaking as the lender posted first quarter results on May 1, the chief financial officer of Lloyds Banking Group, Britain's biggest home loan provider, said he would be "surprised" if mortgage growth was quite as strong in the second quarter as it was in the first three months of 2025.

Trade body UK Finance is forecasting an 11% rise in gross UK mortgage lending in 2025 to 260 billion pounds.

($1 = 0.7492 pounds)

(Reporting By Sinead Cruise; Editing by Toby Chopra and Hugh Lawson)