"The UK mortgage market is broadly working well for a wide range of customers and does not need root-and-branch reform"
- Kate Davies - IMLA
The Intermediary Mortgage Lenders Association (IMLA) has responded to the FCA’s discussion paper on the future of the mortgage market (DP25/2), welcoming a move toward regulatory flexibility.
The association emphasised that any reforms must preserve consumer protection and uphold the central role of professional mortgage advice. IMLA also urged the regulator and the Government to address the biggest barrier to first-time homeownership: a shortage of suitable properties.
Key points from IMLA’s response
Advice remains critical: Around nine in 10 mortgages are arranged via intermediaries, showing that consumers value professional guidance. Any simplification of regulation must not reduce access to impartial advice. The FCA should continue promoting advice-led journeys so customers can compare options confidently and avoid foreseeable harm.
Boost housing supply: Reforming affordability alone will not drive first-time buyer activity. A significant increase in appropriate, genuinely affordable homes, particularly starter homes, is essential.
Long-term fixed rates: IMLA does not support regulatory intervention to push long-term fixed-rate mortgages. These products are more expensive, inflexible, rely on funding models uncommon in the UK, and, according to the David Miles review, have limited consumer demand. If demand existed, competitive solutions would already be widespread.
Targeted affordability reform: Pragmatic updates to stress-testing are encouraged, with lenders allowed discretion to set buffers rather than using a single central stress rate. Rent-payment history can inform affordability assessments, but should not be the sole factor.
First-time buyers and LTI constraints: IMLA welcomed recent easing of the LTI flow limit, which previously restricted higher-LTI lending to creditworthy first-time buyers. Further changes should be based on robust risk evidence and individual lender judgment.
Later-life lending: No new rules are required; the key is timely access to qualified advisers who can assess needs and, where appropriate, refer to specialists via clear, industry-led pathways.
Shared Ownership: Barriers largely stem from scheme administration and documentation, rather than FCA rules, so regulatory intervention is unlikely to increase volumes.
EPC policy: Energy efficiency measures must treat all tenures fairly. Lenders should not be held responsible for the EPC status of mortgaged properties.
Responsible AI: IMLA supports AI that reduces administration and improves processes, but it should assist qualified advisers rather than replace them. The FCA’s role should focus on monitoring real-world use and safeguarding consumers.
‘Enhanced’ advice level unnecessary: Introducing additional levels of advice for certain groups could over-complicate the process and create unhelpful complexity.
“We cautiously welcome proportionate, evidence-led steps that could help more people into homeownership where they genuinely improve outcomes," comments Kate Davies, executive director at IMLA (pictured). "But professional mortgage advice is non-negotiable. Intermediaries are central to helping consumers navigate choice, risk and affordability. The UK mortgage market is broadly working well for a wide range of customers and does not need root-and-branch reform. Any changes should be measured, carefully staged and developed in close consultation with industry so we widen access without undermining standards.”
