Two regulatory clocks are ticking for lenders this month
Buy now, pay later borrowing came under Financial Conduct Authority (FCA) regulation for the first time on 15 July, and the regulator's consultation on reforming mortgage affordability rules for first-time buyers closes on 28 July.
New data from Mojo Mortgages suggests both changes are arriving at a market where a significant share of first-time buyers are not giving lenders a full picture of their finances.
Deferred Payment Credit, commonly known as BNPL, is now subject to the Consumer Duty, and providers must carry out affordability checks before lending, give borrowers clear repayment information, and offer support to those in financial difficulty.
The FCA said the market had grown from £0.06 billion in 2017 to more than £13 billion in 2024, and that 10.9 million adults, or one in five UK consumers, used it in the year to May 2024.
Lenders now need FCA authorisation or temporary permission to keep operating, with full authorisation applications due within six months of the regime taking effect.
What the regulator is asking about affordability
The FCA's consultation paper CP26/18 proposes giving lenders more flexibility to assess first-time buyers, older borrowers and the self-employed on their full and current financial circumstances, rather than excluding them automatically for minor or past credit issues.
The paper also covers flexible repayment options for variable and foreign-currency income and updated guidance for interest-only and retirement interest-only lending.
The FCA notes that around 99% of mortgages taken out since 2014, when standards were tightened, remain out of arrears, a figure it is using to argue there is room to widen access without loosening responsible lending requirements.
Responses to the consultation are due by 28 July, with a policy statement expected in the second half of the year.
Mojo Mortgages' First-Time Buyer Sentiment Survey, which polled 1,000 UK first-time buyers, found that 25.5% have hidden or downplayed their spending from a partner, rising to 29.7% among 25-34 year olds, while 18.4% have hidden debt and 13.2% have misrepresented their salary or bonus.
Kayleigh Jackson, mortgages sales manager at Mojo, has said an active buy now, pay later habit or "minor, regular gambling transactions" on a bank statement can concern an underwriter as much as a missed payment, and that lenders look closely at spending patterns in the months before an application, not only at deposit size.
Independent data points the same way
That pattern is not confined to Mojo's customer base. A 2024 Cifas survey found that 16% of UK adults admitted they, or someone they know, had misled a mortgage lender about their salary, with some respondents prepared to inflate earnings by as much as £10,000.
Cifas' most recent Fraudscape report also recorded more than 444,000 fraud cases logged to the National Fraud Database in 2025, the highest annual total on record and a 6% rise in 2024.
Misuse-of-facility filings, covering fraudulent activity on accounts and credit facilities after they are opened, rose 43% year on year, pointing to a wider rise in financial dishonesty that non-disclosure at the mortgage application stage sits alongside.
A curriculum problem sits underneath both stories
The same Mojo survey found that 79% of first-time buyers believe their schooling did not prepare them for mortgages, interest rates or home ownership, rising to 86% among 18-24 year olds.
Rhys Edwards, a mortgage consultant at Brooks Financial, has described clients reducing their own affordability without realising it, such as by taking out car finance shortly before applying, and said financial education should be part of the national curriculum.
That gap is arguably what both regulatory moves are trying to correct for at the point of application, rather than beforehand.
For intermediaries, the two developments pull in slightly different directions at the same time. The CP26/18 proposals would give lenders more discretion to look past minor credit blemishes and non-traditional income, while BNPL regulation and the survey findings suggest the spending data underwriters increasingly rely on is not always complete or accurate.
Brokers preparing clients for applications may need to have a franker conversation about BNPL use and undisclosed debt before a case reaches underwriting, particularly while the FCA's wider mortgage rule review continues through 2027.
The FCA is accepting responses to CP26/18 until 28 July; a policy statement is due in the second half of 2026.
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