UK Regulators Move to Ease High Loan-to-Income Mortgage Limits

UK financial regulators are moving to adjust how the limit on high loan-to-income (LTI) mortgage lending is implemented, in a change aimed at improving access to homeownership without dismantling protections against excessive borrowing. A joint consultation by the Prudential Regulation Authority and the Financial Conduct Authority, reflecting a recommendation from the Financial Policy Committee, closed on July 1 and proposed measuring high-LTI lending using fixed quarters rather than a rolling four-quarter average. The aggregate cap, which restricts the share of mortgages extended at 4.5 times income or more, would still be kept consistent with the overall 15% flow limit that guards against a build-up of household indebtedness. Regulators said the proposals could benefit consumers through expanded choice and improved access, while noting that risks such as higher indebtedness and potential arrears are mitigated by affordability rules, the Consumer Duty and supervisory oversight. Implementation is expected in the second half of 2026. The move comes as elevated mortgage rates continue to strain affordability, and it forms part of a wider effort to support homebuilding and a more competitive mortgage market.