The percentage can describe the market rather than each bank
A UK lender can make more than 15% of its relevant new mortgages at high loan-to-income ratios while the combined market remains at 15%. That is possible because the combined percentage counts loans across lenders with different lending mixes. It does not require every bank to have the same percentage.
On 14 October 2026, the PRA and FCA finalized a framework removing the firm-specific 15% cap while seeking to keep aggregate high-LTI lending consistent with the existing 15% limit. Its announced effective date was 28 October 2026. The policy and published aggregate figures discussed below are identified by their dates; they should not be mistaken for a live reading of lending conditions. Some lenders already had flexibility through interim arrangements, so this framework was not the first possible exception to the earlier baseline.
The change concerns how lending is managed across firms. It does not promise any household a particular mortgage.
What counts as high LTI?
Loan to income compares mortgage borrowing with the gross annual income assessed by the lender. Under this policy, a mortgage at or above 4.5 times that income is high LTI. For joint applicants, the relevant comparison uses assessed joint income.
Suppose the assessed annual income is £50,000. A £225,000 mortgage is exactly 4.5 times income, so it falls into the high-LTI category. A £250,000 mortgage is five times income and also falls into it. The category begins at the boundary, rather than only above it.
This is not a claim that 45% of monthly pay goes toward repayments. A loan balance divided by annual income and a monthly payment divided by monthly income measure different things. Interest rates and the repayment term affect the bill even when the LTI ratio stays fixed.
Nor does 4.5 identify a universal maximum loan. Here it identifies the category whose share of relevant new mortgages is being monitored.
Two fictional lenders make the arithmetic visible
Imagine a simplified market containing only two in-scope banks over the same period:
| Lender | Relevant mortgages | High-LTI mortgages | High-LTI share |
|---|---|---|---|
| Bank A | 1,000 | 200 | 20% |
| Bank B | 1,000 | 100 | 10% |
| Combined | 2,000 | 300 | 15% |
Bank A is above 15%. The combined total is exactly 15%. These are invented figures to explain the calculation, not reported lending by actual institutions.
The weighting matters. If A instead makes 9,000 mortgages at 20% and B makes 1,000 at 10%, there are 1,900 high-LTI loans out of 10,000: a combined 19%. Averaging the two banks’ percentages without their loan counts would give the wrong answer.
Count mortgage contracts, not the pounds advanced. A larger individual loan does not get several votes in this particular percentage. The separate question of how bank lending creates money concerns balance sheets, rather than this count-based limit.
Why change the firm-specific approach?
The Financial Policy Committee’s July 2025 record describes the underlying problem. Lenders have different business models and risk appetites. Some may choose to make relatively few high-LTI mortgages while others have demand for more. Applying the same ceiling separately can leave part of the aggregate allowance unused.
The committee recommended changing implementation while retaining the 15% aggregate limit. Its stated concern was the economic vulnerability associated with an over-indebted household sector, including large cuts to consumption after shocks. A lender assessing one applicant and regulators considering household debt across the economy are looking at related but different risks.
The intended flexibility can therefore increase use of the existing allowance without formally raising it. Whether that improves access for a particular borrower depends on lenders’ actual decisions and the application itself.
Flexibility comes with supervision
The new approach is not an unconditional entitlement to remain above 15%. Lenders must maintain governance and risk controls and be able to adjust future lending. The FCA guidance specifically warns firms against assuming they can permanently maintain a higher flow.
There are also two measurement windows. A firm’s high-LTI flow uses a rolling set of four calendar quarters. The published aggregate gauge uses a single calendar quarter. A firm’s recent annual lending mix and the market’s latest quarterly reading should therefore not be compared as though their periods were identical.
If the regulators judge the aggregate inconsistent with the limit, they may set expectations for firms above 15% to reduce future high-LTI lending gradually. A published reading is not an automatic instruction to stop all lending. The PRA statement says adjustments concern future decisions; firms are not expected to withdraw existing approved mortgage offers.
For a deliberately hypothetical calculation, a firm at 20% is five percentage points above 15%. Reducing one fifth of that excess would mean a one-point reduction, to 19%. That is not an announced reduction rate or timetable. The actual expectations would come from the regulators.
The published 14.1% has a defined denominator
The PRA’s page reviewed on 22 October reports a 14.1% aggregate high-LTI share for 2026 Q2, April through June. It also says no current reduction expectations have been set. That is dated information about the published position, not a forecast.
The gauge covers mortgages and firms within the policy’s scope. The page identifies exclusions including buy-to-let lending and remortgages with no increase in principal; lending by firms below the relevant size threshold is also excluded from the aggregate calculation. Other product exclusions apply.
This is why “14.1% of all UK mortgages” would be misleading. A percentage is only informative when the reader knows what entered the count and what was left outside it.
A lender’s capacity and your affordability are separate
The FCA’s consumer guidance says lenders must check whether repayments are affordable by examining income and expenditure. Nationwide’s own lending criteria independently illustrate this distinction: borrowing depends on individual affordability, and its outgoings guidance includes credit commitments, childcare, travel, and property costs. These are one lender’s criteria, rather than an identical checklist imposed on every firm. Two households with the same gross income can have very different monthly room for repayments.
That distinction survives the change in the aggregate framework. A bank wanting more high-LTI business still has to assess applicants. More room within its strategy does not establish that a larger loan is suitable, cheaper, or available to everyone.
When interpreting a headline about relaxed mortgage limits, keep three numbers apart: the multiple used to classify an individual loan, a lender’s share of high-LTI new business, and the combined share across the in-scope market. Mixing them turns a change in supervision into a borrowing promise the policy never made.
