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Chancellor Rachel Reeves has backed the UK’s financial watchdog’s plans to explore ways to allow more mortgage risk-taking by banks to help more people own their own homes.

The chancellor told the Financial Times that he welcomed proposals from the Financial Conduct Authority to raise limits on mortgages and was “fully open to looking at ideas that would improve home ownership and help working families to get on the housing ladder”.

Reeves heads to Davos this week to pitch the UK as an investment destination at the World Economic Forum as the Labor government tries to shore up growth after the economy slumped in the second half of last year.

With his self-imposed fiscal rules under pressure and business sentiment suffering after his decision in the October Budget to raise employer national insurance contributions, the chancellor is under heavy pressure in politics since the beginning of the year.

The Treasury is at the center of the government’s effort to push regulators to take steps to boost growth. Reeves met with several UK managers last week to hear their ideas.

“My biggest concern is that we’re being regulated for risk while ignoring growth,” Reeves said. “We need to make sure that the regulators also consider the impact of their policies on growth – that is what we are determined to do as a reforming government.”

The FCA said in its letter to the prime minister published on Friday that it will “begin to simplify responsible lending and advice rules for mortgages, support home ownership and open a discussion on the balance between access to lending and defaults level”.

UK mortgage lending is controlled by a mix of rules from the FCA and the Bank of England, many of which were introduced after the 2008 financial crisis when many banks had to be bailed out by the state.

The rules restrict how much banks can lend as a multiple of a person’s income or the value of a property and require affordability tests to assess whether borrowers can cope with future interest rate increases.

“Home ownership declined under the last government and we are determined to turn that around,” Reeves said, adding that the Treasury “will be looking at the FCA’s ideas in this area”.

The proportion of households that own their own accommodation fell from 64.3 percent in 2011 to 62.5 percent in 2021, according to the Office for National Statistics.

Richard Donnell, executive director of property portal Zoopla, said the “big barrier” stopping many people from getting a mortgage was the FCA’s stress test affordability requirement, which meant banks had to test whether borrowers can cope with rising borrowing costs.

Reeves has been angered in recent weeks after leaving himself a small £9.9bn margin of error against his ruling budget to fund day-to-day government spending from tax receipts 2029/30. That margin is at risk of being wiped out by any renewed surge in bond yields.

He said that the Budget has the right balance when it comes to headroom against his rule and that the March forecast from the Office for Budget Responsibility will depend on many factors, not just bond yields.

While global markets are experiencing “headwinds”, fiscal rules remain “non-negotiable”, Reeves added. That means he will not make any changes to the rules published during the Budget, he added.

Asked if he could reject a March tax increase to ensure he meets the rules, Reeves reiterated that “we don’t have a Budget in March. . . . my commitment to one fiscal event a year remains .

Reeves acknowledged that the Budget, which has been heavily criticized by business leaders for raising employer NI and wage costs, involved making “difficult decisions”. But he insisted that they are the right ones to turn the economy around.

He has yet to hear a serious alternative to the measures, he said.

“Just think of the alternative, if I hadn’t taken those tough decisions to put the public finances on a solid footing, what would have happened to Britain’s market confidence,” he said. “I have to face the legacy I have. That means making tough decisions but they are the right decisions to get our economy back on a solid footing.

Speaking ahead of Donald Trump’s inauguration as US president, Reeves said the fact that he is “obviously a deal man” made him hopeful that “there is scope” to negotiate a trade deal in the new the administration.

While talks have yet to start, the chancellor said any trade deal with Washington “must be right for the UK”, adding that Labor would not budge from its position banning imports of US washed chlorine chicken or hormone-fed beef.