UK PRA and FCA Consult on Changes to Loan to Income Flow Limit Rule
Summary
UK FCA and PRA published consultation papers (CP26/12 and CP6/26) proposing to remove the firm-level 15% cap on high LTI mortgage lending (LTI ratio 4.5+) while retaining the 15% aggregate limit across the market. This gives individual lenders greater flexibility to set their own high LTI strategies. The consultation closes 1 July 2026, with implementation expected in H2 2026 and a backstop date of 31 December.
What changed
The FCA and PRA are consulting on changes to the loan to income (LTI) flow limit rule in the UK mortgage market. The regulators propose to remove the firm-level 15% cap on high LTI lending while retaining the 15% aggregate market limit, giving individual lenders greater flexibility. Interim measures introduced in July 2025 via modification by consent will remain in force until the new rules take effect.
Affected banks and mortgage lenders should monitor this consultation and review their high LTI lending strategies in preparation for potential implementation in H2 2026. Firms should consider submitting comments by the 1 July deadline to influence the final rules.
What to do next
- Monitor for final rule
- Review high LTI lending strategies
- Prepare for implementation in H2 2026
Archived snapshot
Apr 10, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
April 9, 2026
UK PRA And FCA Consult On Changes To Loan To Income Flow Limit Rule
A&O Shearman + Follow Contact LinkedIn Facebook X Send Embed
The UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority (PRA) has published consultation papers (CP26/12 / CP6/26), proposing changes to the loan to income (LTI) flow limit rule in mortgage lending. The regulators propose to remove the firm level 15% cap on high LTI lending (mortgages with an LTI ratio of 4.5 or above), while retaining the 15% limit in aggregate across the market, giving individual lenders greater flexibility to set their own high LTI strategies. This follows interim measures introduced in July 2025, under which PRA firms were permitted, via a modification by consent, to disapply the firm level cap, while FCA firms could seek individual guidance to lend above 15%, pending completion of the policy review.
The PRA proposes new rules in the Housing Part of the PRA Rulebook and a new supervisory statement, while the FCA will issue new general guidance replacing FG25/4. The regulators would publish quarterly data on aggregate high LTI lending and may expect firms to gradually reduce flows if the aggregate limit is exceeded; the consultation also clarifies scope, excluding further advances and retirement interest only mortgages. The deadline for responses is 1 July. Implementation is expected in the second half of this year with interim measures to remain in force up to the implementation date for the changes resulting from this consultation, with a backstop date of 31 December.
[View source.]
Latest Posts
- BoE and PRA Response On AI In Financial Services
- UK FCA Confirms An Increase To FOS Award Limits
- DRCF Paper On The Future Of Agentic AI
- UK PRA And FCA Consult On Changes To Loan To Income Flow Limit Rule
- Getting ready for the EU Pharma Package part 3: Accelerating drug development and authorization See more »
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Attorney Advertising.
©
A&O Shearman
Written by:
A&O Shearman Contact + Follow more less
PUBLISH YOUR CONTENT ON JD SUPRA
- ✔ Increased readership
- ✔ Actionable analytics
- ✔ Ongoing writing guidance Join more than 70,000 authors publishing their insights on JD Supra
Published In:
Consultation Papers + Follow Consumer Financial Products + Follow Financial Conduct Authority (FCA) + Follow Financial Services Industry + Follow Lenders + Follow Loans + Follow Mortgage Lenders + Follow Mortgages + Follow Proposed Rules + Follow Prudential Regulation Authority (PRA) + Follow Regulatory Reform + Follow UK + Follow Finance & Banking + Follow Residential Real Estate + Follow more less
A&O Shearman on:
"My best business intelligence, in one easy email…"
Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: Sign Up Log in ** By using the service, you signify your acceptance of JD Supra's Privacy Policy.* - hide - hide
Related changes
Get daily alerts for JD Supra Finance & Banking
Daily digest delivered to your inbox.
Free. Unsubscribe anytime.
Source
About this page
Every important government, regulator, and court update from around the world. One place. Real-time. Free. Our mission
Source document text, dates, docket IDs, and authority are extracted directly from A&O Shearman.
The summary, classification, recommended actions, deadlines, and penalty information are AI-generated from the original text and may contain errors. Always verify against the source document.
Classification
Who this affects
Taxonomy
Browse Categories
Get alerts for this source
We'll email you when JD Supra Finance & Banking publishes new changes.
Subscribed!
Optional. Filters your digest to exactly the updates that matter to you.