CP26/18: what the FCA proposes for bridging loans and RIO mortgages

FCA CP26/18 is the consultation from the regulator's Mortgage Rule Review that proposes changes to bridging, retirement interest-only (RIO), credit-impaired and other lending rules. It ran from 9 June to 28 July 2026, and the FCA aims to publish a policy statement in the second half of 2026.^1,2

It is aimed at mortgage lenders, administrators and intermediaries (para 1.15). The rule changes themselves fall on lenders; the paper puts no new duties on brokers for bridging or RIO cases.¹

A regulated bridging loan is currently defined as one with a term of 12 months or less. The FCA proposes to extend that to 24 months (para 7.17), with the original term and any extensions together capped at 24 months (para 7.18).¹

It also proposes removing the requirement to reassess affordability as if the loan were new when a lender extends a bridge that isn't an interest roll-up mortgage (para 7.19). The borrower would have been assessed within the previous 12 months, the FCA says (para 7.26).¹

The evidence it gives: 92.7% of regulated bridges taken out in 2024 had a 12-month term (para 7.11), and 6.7% of borrowers who took one between June 2022 and June 2023 took out another before or within six months of the first loan's expected end (para 7.21). There were 4,200 regulated bridging loans in 2024, with a median loan to value of about 43%.¹

The FCA's worry is equity erosion. On its own illustration, a borrower at 43% loan to value whose interest rolls up for 24 months would be left with under 47% equity, against 57% at the start (para 7.41). It is relying on the Consumer Duty, fair-value rules and cheap early exit to stop 24 months becoming the default.¹

MCOB 11.6.15G(4) tells lenders assessing a joint RIO mortgage to consider whether one borrower could keep up the payments if the other died. The FCA proposes removing that guidance (para 3.8), so joint RIO applications would be assessed like standard joint mortgages.¹

Firms told the FCA the guidance constrains supply (para 3.11). It cites 3,002 RIO sales in 2025 against 26,974 lifetime mortgages, and RIO arrears below 1% (paras 3.10 and 3.18). Lenders could still choose to test the survivor's income, including a spousal pension (para 3.17).¹

The paper also proposes making clear that the glossary definition of a credit-impaired customer applies only to the extra steps for debt-consolidation mortgages in MCOB 11.6.16R, an example in MCOB 4.7A.22G and SUP 16.12 reporting (para 5.11). Some firms, the FCA says, apply it more widely, including where the borrower has recovered and the loan isn't for debt consolidation (para 5.2).¹

Nothing changes until the FCA publishes final rules and a start date; the draft instrument leaves the date blank. Until then, place bridging cases under the current 12-month definition and existing extension rules, and watch for the policy statement.¹

• "Under current rules a regulated bridging loan runs for up to 12 months. The FCA has proposed allowing up to 24, but that isn't in force yet."
• "If the loan rolls up interest, the amount you owe grows each month and reduces the equity you keep."