PRA and FCA publish final policy removing the firm-level 15% high LTI cap

The Prudential Regulation Authority and the Financial Conduct Authority published final policy on 14 October 2026 removing the firm-specific 15% cap on high loan-to-income (LTI) mortgage lending, while retaining the 15% aggregate limit recommended by the Financial Policy Committee¹. The PRA's rules and supervisory statement, and the FCA's replacement general guidance, commence on 28 October 2026¹.

High LTI lending is defined as lending at or above 4.5 times a single borrower's income, or joint income for joint borrowers¹. The policy removes the cap that restricted each lender to issuing no more than 15% of its new residential mortgages at high LTI multiples, and gives lenders what the regulators describe as greater flexibility to set their own high LTI strategies¹. The aggregate flow limit of 15% remains¹.

The regulators received 15 responses to consultation paper CP6/26¹. Six respondents supported removing the firm-level cap while keeping the aggregate limit; two said the firm-level cap should remain but the threshold could be increased². Seven agreed that greater flexibility should be supported by stronger governance and controls². Following responses, the final policy measures a firm's high LTI flow, and any expectations for adjustment, on a rolling four-quarter basis, while the aggregate flow is monitored on a single-calendar-quarter measure¹. Further advances and retirement interest only mortgage contracts are excluded from the LTI flow limit¹.

Source: PS19/26¹

The PRA will publish the aggregate single-quarter high LTI flow measure on its website each quarter, with supporting information for 2026 Q3 published in 2026 Q4¹. The PRA said that where action is needed to reduce risk, changes should relate to future lending and existing approved mortgage offers should not be withdrawn². As an example, it said it may communicate to firms or groups exceeding the 15% flow on a four-quarter basis to reduce future flows by a fraction, such as a fifth each consecutive quarter, until the flow is at or below 15%².

Lenders that already applied to exceed the 15% limit under interim measures will not need to take further action, as the relevant directions cease on 28 October 2026¹. The regulators said the changes may increase homeownership rates, noting that first-time buyers have made up an average of 44% of mortgage volume since the policy was introduced in 2014, and accounted for 54% of all high LTI lending in the second quarter of 2025¹.

Why it matters for households

The cap that limited how much high LTI lending any single lender could write is removed from 28 October 2026, so a lender's share of mortgages at or above 4.5 times income is no longer capped at 15% of its new residential mortgage lending¹. The 15% limit now applies across the market as a whole rather than to each firm¹. Borrowers whose applications were already approved are unaffected by any future adjustment, as the PRA said existing approved mortgage offers should not be withdrawn². Where the aggregate flow becomes inconsistent with the 15% limit, the regulators may expect firms to reduce high LTI lending gradually, measured over a rolling four quarters¹. The 4.5 times income definition and the 15% aggregate limit were not changed; feedback on both was passed to the FPC for its next review of housing policies¹. UK Finance said the next review should consider whether the 4.5 times income threshold could rise to five times income².

What happens next

The PRA's rules and supervisory statement and the FCA's general guidance commence on 28 October 2026, when the interim directions fall away automatically¹. The PRA will publish the aggregate high LTI flow for 2026 Q3 in 2026 Q4, and will publish the aggregate single-quarter measure each quarter thereafter¹. The FCA said it would consider the de minimis threshold in its Mortgage Rule Review².