Mortgage rules may be eased to increase economic growth

Mortgage rules could be loosened by the City regulator as it comes under government pressure to increase economic growth and home ownership across the UK.

- Kalyeena Makortoff

The move to "simplify responsible lending" for property purchases is part of a range of proposals put forward by the Financial Conduct Authority in order to prove the watchdog is not standing in the way of the Labour cabinet's "growth mission".

The FCA is also looking to change the law to try to avoid a repeat of mass compensation schemes for consumers, such as the payment protection insurance (PPI) scandal.

It follows complaints from investors and businesses over the potential costs of the car finance commission scandal, which could result in a combined £30bn bill for lenders such as Lloyds and Santander.

Regulators could look at how much first-time buyers are allowed to borrow and issue more loans to customers with smaller deposits, according to the Times, which first reported the changes. At the moment, banks are only allowed to lend 15% of their total mortgage loan book to people borrowing at least 4.5 times their annual salary.