FG26/11: The Financial Policy Committee's recommendation on loan to income ratios in mortgage lending: general guidance

For mortgage lenders, this signals a shift from a rigid 15% cap on high LTI lending to a more flexible framework where individual lenders may exceed that threshold, provided the overall market flow remains consistent with the 15% limit. Compliance teams should update lending policies and risk frameworks to reflect the new flexibility, while implementing robust monitoring to track high LTI volumes and ensure aggregate flows stay within prudential expectations. Firms must align with the PRA's amended Rulebook and new supervisory statement, and review the joint policy statement (FCA PS26/20 / PRA PS19/26).

Key actions include revising credit risk appetite, updating affordability assessments, training staff, and preparing for enhanced regulatory reporting. The change presents opportunities for lenders to compete more effectively in high LTI segments, but requires careful balance against financial stability and consumer protection obligations.