PRA and FCA amend Loan-to-Income flow limit rule to apply industry-wide

The Prudential Regulation Authority and the Financial Conduct Authority amended the loan-to-income "flow limit rule" so that the 15% ceiling on annual mortgage lending above 4.5 times a borrower's income applies to the industry as a whole rather than to each lender individually¹. The change was announced on 1 July 2025.

Under the previous rule, lenders could issue only 15% of new mortgages at more than 4.5 times a borrower's income. Under the updated approach, individual lenders can exceed this level, although a cap still applies across the market as a whole². The Financial Conduct Authority relaxed the long-standing rules limiting high loan-to-income lending in the summer of 2025².

The committee that examined the change said:

"This amended the Loan-to-Income (LTI) "flow limit rule", which permits no more than 15% of annual mortgage lending to be for loans exceeding 4.5 times the borrower's income, so that it applied to the industry as a whole, rather than to each lender individually."

Housing, Communities and Local Government Committee, Affordability of Home Ownership¹

Lenders have since raised their own loan-to-income ceilings. In January 2026, NatWest and Nationwide joined Barclays in offering loans to home movers up to six times their income². NatWest offers up to six times income on mortgages with a loan-to-value ratio of 75% or less; Nationwide offers the same on loan-to-value ratios of up to 95%; Barclays sits at 85%².

Lender	Maximum loan-to-income	Maximum LTV	Minimum income
NatWest	6 times	75%	£75,000 sole, £100,000 joint²
Nationwide	6 times	95%	£75,000 sole, £100,000 joint²
Barclays	6 times	85%	£75,000 combined for joint applicants²

Nationwide says existing customers who previously took out its Helping Hand mortgage are exempt from the higher income thresholds². Helping Hand is Nationwide's scheme for first-time buyers allowing borrowing of up to six times income, with minimum incomes of £30,000 for single applicants and £50,000 combined for joint applicants². Nationwide reported a 57% increase in the number of first-time buyer mortgages taken at or above five times income in 2025 compared with 2024².

Why it matters for households

The rule change affects how much lenders can advance relative to income, and therefore who can borrow larger multiples. Most first-time buyers are typically limited to around 4.5 times their income², while the six-times products reported are aimed at home movers and remortgagers and carry minimum income requirements². Higher borrowing means higher repayments: a couple with a joint income of £100,000 taking out a £450,000 mortgage at 4.5 times income would face monthly repayments of £2,435.30 based on a mortgage rate of 4.24%, rising by more than £800 to £3,247.07 if the loan increases to six times income, or £600,000².

The change sits alongside wider affordability pressure. The average house price at the end of 2025 was £273,077¹. In 2024 across England, the median house price of £289,995 was 7.71 times median workplace-based earnings, against 3.54 times in 1997 when the median was £59,995¹. Over the past 20 years the typical UK property price has risen by 85%, adding almost £125,000 to the cost of a home, and by 44% over the past decade alone².

What happens next

The Financial Conduct Authority confirmed in a letter to the Prime Minister in December 2025 that it "began once-in-a-generation mortgage reform" in 2025 and will "further overhaul mortgage rules so more people get on the housing ladder" this year¹. The Housing, Communities and Local Government Committee, which launched its inquiry on 17 July 2025, said it supports the government easing some restrictions on mortgage finance while retaining oversight of the system¹.

Sources2 cited