UK Regulators Finalise Changes to the High Loan-to-Income Mortgage Limit: The Firm-Level 15% Cap Goes From October 28, 2026, While the 15% Aggregate Limit and the 4.5 Times Income Threshold Stay

The Bank of England's Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have finalised changes to how the limit on high loan-to-income (LTI) mortgage lending is applied to individual lenders. The final policy was published on October 14, 2026, and the new PRA supervisory statement and FCA guidance take effect on October 28, 2026. This article draws on the FCA's page for its finalised guidance FG26/11 and on a summary of the joint policy statement by the law firm A&O Shearman. The policy statements and the PRA supervisory statement themselves were not reviewed in full, so the rule text should be consulted by any firm applying them.

What the limit is

The Financial Policy Committee (FPC) of the Bank of England recommends a limit on the share of new mortgages that can be lent at high multiples of income. According to the A&O Shearman summary, the FPC defines high LTI as 4.5 times income, and the aggregate flow limit is 15%. In other words, no more than 15% of the total volume of new mortgages in a quarter should be at a multiple of 4.5 times income or more, as a system-wide test.

What was proposed

The FPC made a recommendation in July 2025 that the regulators amend how the flow limit is implemented, giving lenders flexibility while keeping the aggregate flow consistent with the 15% limit. The FCA says the recommendation was that individual lenders should be allowed to increase their share of high LTI lending above 15%. The PRA and the FCA published a joint consultation on April 1, 2026. The FCA's page gives the end of the consultation as July 1, 2026, although its update log also lists a consultation period closing on September 18, a conflict the page does not explain.

What was decided

The regulators are removing the firm-level 15% cap on high-LTI lending. This gives lenders more room to set their own strategies, but the aggregate flow is still tested for consistency with the FPC's 15% limit. The regulators changed the proposal in one respect. Individual firms' high-LTI flows, and any adjustments the regulators require, will be measured on a rolling four-quarter basis, which differs from the consultation proposal. The aggregate flow will be measured on a single calendar quarter, as consulted on.

The regulators received responses on the calibration of the policy, meaning the 4.5 times multiple and the 15% limit, and treated them as outside the consultation's scope. They passed the responses to the FPC for its next review of housing policies. The FPC is to consider them in that review, and nothing in the sources reviewed says it will change them.

Transparency and monitoring

The PRA and FCA will calculate the aggregate high-LTI flow each quarter. The PRA will publish that figure, along with the total volume of in-scope completed mortgages and their share of all completed mortgages. The FCA will publish information when it expects adjustments, and the regulators will publish additional information on mortgage market trends. The FCA will monitor aggregate and individual firm flows as part of its supervisory work, and will monitor compliance with the guidance and any temporary supplemental LTI guidance.

Who is covered

The FCA guidance applies to FCA-authorised mortgage lenders that are not also PRA-authorised or subsidiaries of PRA-authorised firms. The PRA's Rulebook amendments and supervisory statement apply to all firms in scope of the Housing Part of the PRA Rulebook, and the PRA says they also apply at UK subsidiary level for firms not already in scope.

A note on dates

The sources give the key dates consistently: consultation opened April 1, 2026; final policy and guidance issued October 14, 2026; new documents effective October 28, 2026. The one inconsistency is the FCA page's two references to when the consultation closed, July 1 in the main text and September 18 in the update log. Because the consultation outcome was published on October 14, the exact closing date does not affect the current rules, but readers citing the consultation should check the original paper.

Documents and dates

The joint policy statement is published as PRA PS19/26 and FCA PS26/20. The PRA's new supervisory statement is SS2/26, which sets out governance and risk management expectations. The FCA's non-Handbook guidance FG26/11 replaces its earlier general guidance FG14/8 of October 2014, as revised by FG17/2 in February 2017 and FG25/4 in July 2025. Both new documents take effect on October 28, 2026.

What it means for borrowers

The sources reviewed do not say that lenders will approve more high-LTI loans, and any such effect would depend on lenders' choices. Borrowers should expect that availability of mortgages at high multiples of income may vary by lender. What the sources do not say includes the expected effect on house prices, the number of additional loans, or whether lenders have already announced changes, and this article makes no claim about them.