On 8 July 2025, the Prudential Regulation Authority and the Financial Conduct Authority jointly released a policy statement (PS11/25) providing feedback to the proposed amendments to the PRA Rulebook and FCA Guidance concerning the de minimis threshold for the loan to income (LTI) flow limit in mortgage lending, as consulted on in CP6/25.
Background
The LTI flow limit ensures that mortgage lenders limit the number of new residential mortgage loans made with an LTI ratio of 4.5 or above, to no more than 15% of their total number of new residential mortgage loans per annum. Under the current de minimis threshold, lenders that extend residential mortgages of less than £100m in value, or fewer than 300 in number per annum are exempt from the LTI flow limit.
In November 2024, the Financial Policy Committee (FPC) recommended that the LTI limit should only apply to lenders that extend residential mortgages above £150m per year, rather than the £100m threshold set in 2014.
CP6/25 set out the PRA’s and FCA’s proposals to implement the FPC’s recommendation by amending their existing rules and general guidance, respectively.
Final policy
In PS11/25 the regulators report that having considered the feedback to CP6/25, they have decided to change the LTI flow limit per the FPC recommendation.
Therefore the final rules and amendments to general guidance are consistent with those set out in CP6/25.
Next steps
The rules will commence on 11 July 2025 as will the guidance.