Affordability, explanation and switching policy rules revised

The Financial Conduct Authority (FCA) has revised a set of rules and guidance in its Mortgage Conduct of Business sourcebook covering remortgaging with the same or a different lender where no additional borrowing is taken. The provisions MCOB 11.9.5R, 11.9.6G, 11.9.8G, 11.9.11R and 11.9.12R were updated, with MCOB 11.9.5R dated 22 July 2025¹. The section as a whole was last updated on 26 June 2026¹.

The section applies to a firm where a customer is a borrower under an existing regulated mortgage contract, with that firm or another, and wants a new regulated mortgage contract with that firm to replace it.

Under MCOB 11.9.5R, a firm must not enter into the proposed contract unless it is more affordable for the customer and any guarantor than the existing contract, or, where the existing lender has indicated a new deal to the customer, than that new deal¹. The rule sets out how "more affordable" is determined, comparing the aggregate of monthly payments due in any discounted or introductory period, or over the term where there is none, plus certain fees the customer intends to pay without adding them to the amount lent, against the aggregate due under the existing contract or contracts¹.

The section permits firms to modify certain provisions when assessing a customer's ability to afford a mortgage. The provisions capable of modification are grouped, such as those linked to the assessment of income and expenditure. Firms can choose whether to adopt all, some or none of the modifications on a case-by-case basis, though they cannot modify some provisions in a group and not others¹. The FCA states:

A firm must have an internal switching policy in place and operate in accordance with it if it wishes to rely on the rules in this section. If a firm has allowed a customer to remortgage to it, it will allow that customer the benefit of the rules again, or rely on MCOB 11.6.3R or MCOB 11.7 if relevant, if the customer wants to switch again to a more affordable product with the firm. The firm's responsible lending policy must also set out how it will apply the rules in this section¹.

The section also addresses payment shortfalls. Where a customer has a payment shortfall and has entered into a repayment arrangement with their current lender, the customer should be treated as having a payment shortfall until it is repaid, even if they are up to date under the arrangement.

The purpose of the section, the FCA says, is to facilitate borrowers switching mortgages provided they are not taking out additional borrowing. The mortgage does not have to be exactly like-for-like: a borrower can, for example, extend the term, consolidate a first charge and one or more second charge regulated mortgage contracts, move from interest-only to repayment provided it is more affordable, or take a mortgage with a different type of interest rate¹.

Why it matters for households

The rules affect borrowers who want to move to a new mortgage deal without increasing their borrowing, whether staying with their current lender or moving to a different one. Where a firm chooses to apply the modified affordability provisions, the assessment turns on whether the new deal is more affordable than the existing contract or a new deal the existing lender has indicated, rather than the standard affordability test. The affordability checks a lender must carry out can therefore differ for this type of remortgage.

The Mortgage Market Review and today's affordability rules set the wider framework these provisions sit within, and mortgage rules, your rights and protection covers how the conduct rules apply to borrowers.

What happens next

The updated provisions are in force, with MCOB 11.9.5R dated 22 July 2025 and the section last updated on 26 June 2026¹. No further implementation dates for these changes have been reported.