The Financial Conduct Authority (FCA) has outlined several reforms to the mortgage market, including changes to help people confidently plan for later life, with plans to review retirement interest-only requirements to make them more accessible. 

The FCA's reforms, which focus on four areas overall, are intended to make the housing ladder more accessible to first-time buyers and the self-employed, as well as helping ease later in life burdens faced by pensioners. 

Outlining the reforms, FCA director of retail banking, Emad Aladhal, noted that, for many, homeownership is a foundation of long‑term financial resilience and improving lives. 

However, he warned that today’s affordability challenge may be creating problems for the future, emphasising that "in a world where pension income is less reliable, housing wealth will be more important to financial wellbeing."

Indeed, the FCA pointed out that, in future, more mortgage holders will borrow beyond state pension age, and with projections of under‑saving into retirement, it argued that access to later life mortgages could be key to helping people achieve their financial goals in later life.

This was supported by industry feedback, as the FCA said that respondents to its earlier industry engagement had warned that more borrowers may need to use their housing wealth to support their retirement, long‑term care needs, and achieve financial security in later life.

Industry research also supports this, as analysis from LCP found that over a million people have taken out a new mortgage that will run past state pension age in just three years alone.

Given this, the FCA confirmed plans to undertake a focused market study to assess if the market can and will develop to meet the increased and differing needs of consumers in the future.

This will consider how the FCA can support the market to adapt, and look to support evolving industry innovations and opportunities to get the right long‑term solutions in place.

The study will be launched in early 2026, with an update expected by the end of 2026.

"We believe now is the right time to consider the trade‑offs in the current market, and consider whether, by rebalancing risk, we can improve outcomes for more consumers," the watchdog stated.

"As we do so, we will remain mindful of the lessons learned from the
financial crisis and the importance of responsible lending."

The FCA will also be reviewing retirement interest‑only (RIO) mortgages, after industry feedback suggested that this remains an underused solution for many consumers, with regulation being the main barrier.

RIOs are loans for older consumers where regular interest payments are made for life, with repayment of the loan made following a specified life event, at which point, the loan is repaid, often through the sale of the property.

"We will review our guidance to decide if we need to make changes to support alternative
affordability assessments for RIOs," the FCA confirmed. "We will also assess whether RIOs should be exempt from limits on higher LTI lending requirements, benefitting from similar treatment to that currently given for lifetime mortgages."

This is not the first time that the FCA has highlighted the link between pension provision and home ownership, as chief executive Nikhil Rathi, previously warned that mortgage pressures are increasingly becoming a pensions issue, with “bold shifts” needed to address structural challenges.

However, it has seemingly held back in some areas, as although the FCA had previously suggested that there could be discussion of whether, with the right product design and consumer protections in place, it should allow withdrawals from a pension to help with a first home, such proposals have not featured in the latest package of reforms.

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