On 1 April 2026, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) jointly published a Consultation Paper on high loan to income lending.
The Consultation Paper follows a recommendation that the Financial Policy Committee (FPC) issued in July 2025 that the FCA and PRA amend implementation of its loan to income (LTI) flow limit to allow individual lenders to increase their share of high LTI lending while aiming to ensure the aggregate flow remains consistent with the 15% limit.
Immediately following the FPC’s recommendation, the PRA made available a modification by consent (MbC) for PRA firms to disapply the 15% limit and the FCA informed FCA firms they could apply for individual guidance if they wanted to lend at high LTI ratios above 15%. The regulators set out that these were interim measures while the regulators’ policy review was ongoing.
The proposals in the Consultation include removing the current 15% high LTI flow limit for individual firms from PRA rules and FCA general guidance. The regulators propose that, while the aggregate is consistent with the FPC’s recommended 15% limit, lenders should have additional flexibility to determine their individual high LTI lending strategies, in line with their own risk appetite and business models. To ensure that the aggregate flow remains consistent with the 15% limit, as per the FPC recommendation, there may be instances where the regulators expect firms to gradually reduce their high LTI flow towards 15%. To enable firms to plan for such adjustments, the PRA would publish the aggregate high LTI flow on its website each quarter from the date the new PRA rules come into force. This webpage, and a webpage on the FCA’s website, will also include communication from the regulators on the details of any such adjustments. The regulators propose measuring high LTI flow using fixed quarters, rather than a four-quarter rolling average.
Next steps
The deadline for comments on the Consultation Paper is 1 July 2026.
The interim measures will remain in force up to the implementation date for the changes resulting from the Consultation Paper, with a backstop date of 31 December 2026.