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High loan to income lending

ended 01. April 2026

The Bank of England has today published a Consultation Paper on high loan to income lending. You can read it in all its glory here if you have an hour spare and are inclined to a little self-flagellation. In July 2025, the FPC recommended the PRA and FCA (‘the regulators’) amend implementation of its LTI flow limit to allow individual lenders to increase their share of lending at high LTIs, while aiming to ensure the aggregate flow remained consistent with the limit of 15%. Given the levels mortgage rates have now risen to, the inversion of base rate expectations and rising unemployment, is allowing lenders to increase their lending at high LTIs still prudent? Any thoughts, ASAP please.

2 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
What regulators allow and what lenders actually offer may not always align, especially when we have short-term mortgage rate concerns. Santander has already reduced the amount it will lend based on its overall affordability model, using a higher background assessment rate that reduces the budget of new borrowers. Lenders have a responsibility to ensure all mortgages, whatever the LTI, are afforded by the new borrowers, and some relaxation of specific rules isn't going to make a significant difference in a short space of time. Higher rates are obviously a concern in the short term, but lenders will review this regularly and make changes similar to Santander's if required.
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Peter Dockar
Chief Commercial Officer at Gen H (Generation Home)
The proposals are broadly sensible. Arbitrary LTI thresholds have always been a blunt instrument - blocking lending to perfectly credit-worthy borrowers - and it's good to see the regulators acknowledging that different lenders serve different parts of the market.

One wider frustration: the regulation still treats a 4.5x LTI the same as a 6x or 7x, which clearly isn't right. A more graduated approach would better reflect actual risk.

On the macro concerns - unemployment, rate inversion - the FPC is keeping the aggregate 15% flow limit in place, so overall systemic risk isn't increasing. And the rates environment is less relevant than it might seem; stress testing already requires lenders to factor in future rate changes. Higher rates also mean we're lending less in absolute terms anyway, so the real test of this framework will actually come when rates fall.

Overall, a sensible step - but the industry should keep pushing for rules that treat meaningfully different risks as different.