One of the 2024 election manifesto commitments of the Labour Party was to: “Double the size of the UK’s co-operative and mutuals sector, to bring innovation and new products to the market. This is seen as a crucial step in driving economic prosperity and providing a secure platform for growth.”

Mutual and specialist lenders want to help the would-be mortgage borrowers who are underserved by the major ‘high street’ lenders. We must listen carefully to the needs of intermediaries who find that their clients – be they first time buyers, those in retirement, expats or self-employed – are just not catered for.

Like other lenders, we want to improve our criteria and develop innovative products for them. In late 2025 we announced a significant upgrade to our affordability model for repayment and interest-only owner occupier mortgages, substantially increasing borrowing power by up to 25%.  This has proved to be a helping hand for those who continue to be shunned by the major lenders.

Broker feedback

Brokers have already reported positive results and a big uplift in potential borrowing is evident. For example, one client wanted to borrow £341,000 – our previous calculator was returning a maximum loan of £297,137. However, using our new calculator, maximum borrowing based on the same details increased to £363,000 – easily allowing him to borrow the full amount required.

There is the example of an expat owner occupier client, who needed £300,000, but was only offered around £240,000.  Using our new calculator, we were able to put an offer of £300,000 on the table.

Using common sense is essential when assessing each mortgage application. Clearly lenders must adhere to the strict rules of Consumer Duty to make sure that they do not allow borrowers to over stetch themselves and borrow recklessly. It is imperative to support clients and ensure that they achieve their financial goals by taking out only the most appropriate, affordable mortgage products.

The FCA’s Consultation Paper

The FCA’s consultation paper on simplifying mortgage lending criteria and loosening restrictions on lenders, announced in December, shines a light on underserved areas of the market. It is a good thing, particularly for later life and self-employed borrowers. We expect this will bring increased focus, further discussion, and innovation from other lenders around later life, helping to bring this, hitherto niche area of the lending market it into the mainstream.

Hopefully, this will drive more holistic advice – which currently tends to be quite siloed. BDMs need to work hard make brokers aware of what the whole of market offers and how the application process works. The encouraging news is that many of the mortgage clubs and networks are increasingly addressing the later life market and working with building societies to educate brokers.

Retirement Interest-Only

When launched, RIOs were seen as a silver bullet for older borrowers, but the ‘death stress test’ often hampers borrowing. In fact, for Q3 2025, UK Finance data shows that RIO mortgages made up less than 1% of borrowing by the over 55s.

The FCA has stated that it will review the RIO mortgage market – a welcome move and we hope that it will be a main driver in making RIOs a more attractive product to older borrowers as well as a more viable one to lenders. Time will tell.

Darren Deacon is head of intermediary sales, at Family Building Society.