Mortgage rules could be eased to boost loans…

Strict rules on mortgage lending could be loosened to allow more people to borrow for a home, as regulators respond to a call to boost the economy.

In a newly-published letter, the UK’s financial regulator the Financial Conduct Authority (FCA) says it will investigate ways to simplify rules brought in following the 2008 financial crisis.

It is likely to review the balance between protecting borrowers and access to home loans, in a move that would be welcomed by lenders.

The FCA will also consider whether to scrap the £100 cap on purchases made by contactless cards, in line with digital wallets where providers set their own limits.

Prime Minister Sir Keir Starmer, the chancellor and business secretary wrote to the UK’s main regulators in December asking them to come up with ideas for reform that could boost economic growth.

They gave a deadline of mid-January. In it’s response, published on Friday, external, the FCA outlined various programmes underway as part of its aim to boost growth.

But two new ideas are among others mooted, looking at mortgages and contactless payments.

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.

“We 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 letter by FCA chief executive, Nikhil Rathi said.

It will consider the balance between its primary objective of protecting consumers, and a secondary objective of promoting growth.