As regulators heed calls to shore up the economy, strict rules on mortgage lending may be relaxed to allow more people to borrow money to buy homes.

In a letter published late on Friday, the Financial Conduct Authority (FCA) is expected to say it will investigate ways to simplify rules introduced after the 2008 financial crisis.

It is likely to review the balance between protecting borrowers and accessing home loans, a move that will be welcomed by lenders.

The FCA will also consider whether to remove the £100 limit on contactless card purchases, in line with digital wallets.

Prime Minister Sir Keir Starmer, Chancellor of the Exchequer and Business Secretary Letter to key UK regulators in December Ask them to come up with ideas for reforms that can boost economic growth.

The deadline they gave was mid-January. In a response published on Friday, the financial markets regulator will outline the various plans already underway as part of its growth ambitions.

But two new ideas will be proposed, namely mortgages and contactless payments.

Tough rules mean lenders must ensure people can repay their mortgages and test them for higher interest rates.

Additional rules were imposed on mortgage providers after the financial crisis nearly 20 years ago exposed reckless lending practices and put major financial institutions at risk.

The FCA will point to the low number of borrowers currently in arrears or having their homes repossessed as evidence to question whether the pendulum has swung too far.

It will consider the balance between the primary objective of protecting consumers and the secondary objective of promoting growth.

Lenders will welcome the move, but some may question whether lessons have been learned from the crisis.

Charles Roe, head of mortgages at UK Finance, which represents lenders, said: “A review of mortgage rules will help address affordability issues, not just for first-time buyers but also for those looking to move further up the housing ladder. explain.

"Banks will always lend responsibly, but current rules limit the number of people who can get a mortgage, so this can be relaxed."

The FCA's second new idea is to remove the £100 limit on contactless cards to make them easier to spend.

When contactless card payments were introduced in 2007, the transaction limit was set at £10. Cards are often used instead of small change when buying snacks, paper and the occasional groceries.

The limit was gradually increased, to £20 in 2012, £30 in 2015 and finally to £100 in October 2021.

Both ideas aim to encourage spending but could also stoke inflation. They are subject to review and consultation, so changes are unlikely to be made immediately even if approved.