The Intermediary – August 2026 - Flipbook - Page 24
RESIDENTIAL
Opinion
A paradigm shift
for the world of
mortgages?
L
ast month, Gen H
submied its response
to the Financial Conduct
Authority’s (FCA)
‘CP26/18: Mortgage Rule
Review: Supporting
first-time buyers and underserved
consumers’.
Our response looked similar to
many of the industry dras I’d read.
Overall, we are supportive of the FCA’s
proposals as they relate to interestonly and retirement interest-only
(RIO) mortgages.
Among other things, the FCA wants
to widen what counts as a credible
repayment strategy for interestonly lending, and to simplify how
joint RIO applications are assessed
for affordability, removing the
assumption that a surviving borrower
must be able to cover payments alone.
A less conservative approach
Beyond these specific proposals, I
also agree with how the regulator has
positioned this consultation: the idea
isn’t to make interest-only mortgages
accessible to everyone. The idea is to
dial back the extreme conservatism
that has characterised the mortgage
market over the past 20 years, because
the potential benefit outweighs the
potential risk.
While this consultation paper and
interest-only mortgages aren’t going to
solve all the problems in the mortgage
market, I am still very pleased about
the discussion it has sparked. Really,
what I find notable is that it has
happened at all.
products for first-time buyers – and
many still are.
But when we looked at the numbers,
we could see that this scepticism
was based more on stigma than real
industry need. I do think it’s funny
that lenders are suspicious of interestonly products, but are happy to write
40-year mortgages with a 2-year fix,
which is prey close to interest-only
in those first two years!
Based on our own book, we know
that interest-only can increase
affordability by up to 15% and reduce
monthly payments by up to 20%.
So, despite the odd looks, we
launched interest-only for first-time
buyers, and it landed with them. 18%
of our interest-only cases are first-time
buyers. For our part-and-part products
specifically, this number rises to 30%.
Compare this with the wider market,
where first-time buyers take just 2.5%
of all interest-only mortgages.
And now, the regulator – which, to
be sure, is not oen looked upon as a
bastion of agility and innovation – is
giving this a really close look.
I am proud of Gen H for identifying
interest-only as an important
lever for first-time buyers, and for
shipping products that are useful for
people at a variety of stages in their
homeownership journey. I’m also
heartened that the regulator is asking
GRAHAM MCCLELLAND
is chief executive
officer at Gen H
these important questions. Because
ultimately, the positioning here – of
aempting to widen access without
removing the emphasis on suitability
and advice – is one that can be
applied to the entire market, not just
interest-only.
Now I’m looking forward to
what comes next. I’d like to see
guidance from the regulator on
firms’ obligations, and how we can
evidence suitability for these wider
groups. I’d like to see more support
for these products from intermediary
clubs and networks, and industry
compliance leaders.
If these proposals are implemented,
intermediaries will have a tremendous
opportunity to build lasting
relationships with clients, and as
lenders, we’ll need to find ways to
support those relationships as they
develop. This will be a challenge, but
geing it right could change lives.
We are fearful of these products
because they were misused in the
past. But today’s market is not 2008’s
market. We have learned. And taking
these calculated risks could have a
massive benefit for Britain’s aspiring
homeowners. ●
Sustainable products
When Gen H launched interest-only
products for first-time buyers last
year, we got a few odd looks. A lot
of intermediaries and lenders were
sceptical about the suitability of these
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The Intermediary | August 2026
Turning back on accepted conservatism: The benefits outweigh the risks
