UK PRA and FCA final policy on changes to loan-to-income flow limit rule

The UK Prudential Regulation Authority (PRA) and UK Financial Conduct Authority (FCA) have published policy statement PS19/26 / PS26/20 confirming changes to the loan-to-income (LTI) flow limit rule for mortgage lending. The regulators are removing the firm-level 15% cap on high-LTI lending. This is in line with the Financial Policy Committee (FPC) recommendation made in 2025 that the regulators amend implementation of the FPC LTI flow limit to allow lenders flexibility to set their own high-LTI strategies in line with their risk appetite and business models, while aiming to ensure the aggregate flow remained at a level consistent with the FPC-recommended 15% limit.

Key points from the final policy include:

• Following consultation feedback, individual firms' high-LTI flows and any adjustments required, will be measured on a rolling four-quarter basis. As consulted on, the aggregate flow will be monitored on a single-calendar-quarter basis to judge consistency with the FPC limit.
• The PRA will publish the aggregate high-LTI flow on its website each quarter. The FCA will publish information on its website when it expects adjustments. Following consultation feedback, the regulators have decided that alongside this, they will publish additional information to provide lenders with more visibility of trends in the mortgage market.
• The regulators' expectations on governance and risk management for high-LTI lending are set out in a new PRA supervisory statement (SS2/26) and new FCA non-Handbook guidance (FG26/11), which replaces the existing guidance. Both will take effect on 28 October.

The regulators also received responses regarding the calibration of the FPC's definition of high LTI (an LTI ratio of 4.5x) and the 15% aggregate flow limit. The regulators treated these points as outside the scope of the consultation. They have passed them to the FPC to consider in its next review of housing policies.

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