The FCA is consulting on making it easier for first-time buyers (FTBs), older borrowers and the self-employed to get a mortgage.

The regulator will explore how to help lenders offer flexible repayments for people with variable incomes such as the self-employed.

Furthermore, it is to consider rule changes to encourage lenders to look at people’s full situation – instead of automatically excluding those with past credit issues.

Affordability guidance for retirement interest-only mortgages could also be updated, and the regulator will look at giving lenders more flexibility on interest-only mortgages.

Sarah Coles, head of personal finance at AJ Bell, commented: “Mortgage rules are set to ease again, as the FCA considers loosening more of the restraints applied to the mortgage market after the financial crisis. It’s trying to identify the right balance between risk management and flexibility, so it opens the door for more sensible lending, without opening the floodgates to more questionable arrangements.

“Developing products to better suit people’s lives makes perfect sense. Self-employed people with lumpy incomes have been forced to contort their finances into paying the same sums each month under existing rules. A change could allow them to access products that are flexible enough to fit around their lives and their needs instead.

“Taking a more holistic approach to borrowers will also avoid the current situation where someone who has met all their financial responsibilities for years can be ruled out because of a small mistake they made years ago, when their life may have looked completely different.”

Coles said mortgages are just one part of the picture however.

“A healthy housing market also needs enough affordable properties, plus tax rules that don’t distort buyer behaviour and put people off. The flow of first-time buyers also depends on people being able to build healthy deposits. This can be a huge challenge when they’re also having to cover the cost of sky-high rents.

“The Lifetime ISA (LISA) has helped hundreds of thousands of people onto the property ladder. If you qualify, it’s a brilliant way to get a Government bonus of up to £1,000 a year for your house purchase. The Government is planning to consult on an alternative to the LISA, but if you get in now, you’ll be able to keep using it indefinitely, so it could be worth getting started sooner rather than later.”

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