Over a third (35%) of mortgage lenders expect regulatory scrutiny to ease in the next year, research by Target Group has found.

At the recent Future of Mortgage Servicing conference hosted by Target Group and Phoebus Software, mortgage leaders were asked whether they saw regulatory scrutiny easing in 2026.

While 35% said they expect scrutiny to ease next year, the same proportion said they didn’t expect any changes. The remaining 30% thought that it would intensify.

The Financial Conduct Authority (FCA) regulates riskier lending through responsible lending rules for consumers, a principles-based approach to business lending and broader macroprudential measure in collaboration with the Bank of England.

Earlier this year, the regulator issued dated guidance on stress testing, proposing changes to the loan-to-income (LTI) cap and opening a review of mortgage rules.

Chancellor Rachel Reeves has also said she wants to lift limits on mortgages, simplify responsible lending and advice rules for mortgages to support more into homeownership and open a discussion on the balance between access to lending and the levels of defaults.

Chief executive at Target Group, Pete O’Connor, said: "Recent discussions have explored the balance between robust regulation and access to lending. Those policy debates are ongoing with some proposals suggesting a potential rollback of post-financial crisis mortgage rules to boost homeownership and economic growth.

"The drivers behind the proposed changes to mortgage rules must be balanced against the need to protect consumers and maintain financial stability.

"Rolling back post-financial crisis regulation could see riskier lending and one potential outcome is greater arrears and, ultimately, a rise in the number possessions. Collections teams will need to be strengthened in terms of headcount and technological sophistication. As a servicing partner, we see the sector’s need for agile systems – platforms that are capable of adapting to these shifts in scrutiny – is set to grow."

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