Mortgage lenders could get more freedom to offer bigger income multiple loans under plans set out by the PRA and FCA.
The regulators have launched a consultation on changing the current rules so individual lenders are no longer tied to a hard 15% cap on higher loan-to-income lending. Instead, the 15% limit would be monitored across the market as a whole.
In simple terms, that would allow some lenders to do more lending above 4.5 times a borrower’s income, provided the overall market stays within the Bank of England’s guardrails and firms keep proper risk controls in place.
The Bank said the aim is to protect firms’ safety and soundness while giving them greater flexibility to lend in line with their own business models. It also said the changes could improve access to borrowing for creditworthy households, support competition and potentially help boost home ownership.
AFFORDABILITY
The move could give some first-time buyers more chance of borrowing enough to get on the ladder, especially in higher-priced areas where affordability remains stretched.
The FCA said the changes could also encourage more housebuilding and make the UK housing and mortgage market more attractive to investors, although it noted the risks of higher household debt still need managing.
The proposals follow a Financial Policy Committee recommendation made in July 2025, after policymakers concluded the old lender-by-lender cap could unnecessarily hold back some firms while others were not using their full allowance.
The consultation closes on 1 July 2026. If adopted, the new approach is expected to come into force in the second half of 2026.
