The Financial Conduct Authority published a report on 16th January looking at mortgages among other things, and saying that the FCA will
Begin simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults.
The BBC reported that:
Until now strict rules mean lenders have to be sure that people can repay mortgages, testing them for higher rates of interest. Other rules were also imposed on mortgage providers after the financial crisis almost 20 years ago exposed reckless lending and put major financial institutions at risk. The FCA points to current low numbers of borrowers missing repayments, or having homes repossessed, as evidence of questioning whether the rules are too strict.
The reason for the low number of borrowers missing repayments is the current strict set of rules. If the intention is to keep defaults at a low level that is a reason for keeping the rules. It is not a reason for easing the rules.
It raises that question of what the FCA think is an acceptable number of defaulting borrowers. Is it higher than the current low number? Can that be a desired outcome?