The PRA has published Consultation Paper 11/14: Implementing the Financial Policy Committee’s recommendation on loan to income ratios in mortgage lending (CP11/14).
In CP11/14, the PRA sets out proposed rules to implement the Financial Policy Committee’s recommendation on loan to income (LTI) ratios in mortgage lending. The recommendation asks the FCA and PRA to ensure that mortgage lenders limit the number of mortgage loans made at or greater than 4.5 times LTI to no more than 15% of their total number of new mortgage loans. The proposed rules also require firms to apply the rules at UK subsidiary level in relation to firms not already caught by the rules.
In CP11/14, the PRA states that the proposed implementation date for the proposed rules is 1 October 2014, as this is in line with current reporting cycles. To meet this date, the deadline for comments on CP11/14 is 31 August 2014. The PRA will publish a policy statement with feedback and finalised rules at the same time or before the rules come into effect.