PS19/26 – High loan to income lending

Key dates

2026-10-28 Deadline

The PRA amendments to the Housing Part of the PRA Rulebook and SS2/26 commence; the FCA replacement general guidance also comes into effect and prior FCA high-LTI guidance is replaced.

Suggested considerations

• Firms should assess whether their high-LTI risk appetite, lending plans and business model support individual high-LTI flows above 15% from 28 October 2026.
• Firms should review and, where necessary, update board-approved policies, risk appetite statements, underwriting controls, affordability assessments, portfolio limits, stress testing and management information for high-LTI lending.
• Compliance teams may wish to map existing controls and reporting to the rolling four-quarter calculation for individual flows and distinguish this from the regulators’ single-quarter aggregate monitoring measure.
• Firms should establish a process to monitor the PRA’s quarterly aggregate high-LTI publication and the FCA’s notifications regarding expected adjustments, including escalation to senior management and the board where a reduction in lending may be required.
• Firms intending to operate above 15% should consider whether they can reduce high-LTI lending smoothly and predictably towards 15% if requested, including identifying practical management actions and avoiding abrupt changes to customer or intermediary pipelines.
• Firms should confirm that further advances and retirement interest-only mortgage contracts are correctly excluded from the relevant flow calculations and that other mortgage products are classified consistently with the final rules and guidance.
• Firms using the interim PRA modification by consent or FCA individual guidance should confirm that the relevant interim directions will fall away automatically on 28 October 2026 and align systems and procedures with the final framework.
• Senior managers and boards should document oversight of high-LTI strategy, risk appetite changes, portfolio performance, concentration risk and the potential effect of aggregate market developments on future lending.

What changed

The PRA will amend the Housing Part of the PRA Rulebook and the FCA will replace FG14/8, FG17/2 and FG25/4 with new general guidance. High-LTI lending remains lending at an LTI ratio of 4.5 times income or above, with the aggregate market limit remaining 15%; the individual firm-level 15% cap is removed. Individual firm high-LTI flows and any expected reductions will be assessed on a rolling four-quarter basis, while the regulators will monitor aggregate high-LTI flow using a single-calendar-quarter measure. Firms may lend above 15% where their strategy is supported by robust risk management, compensating lending controls, governance and board oversight, but regulators may expect a smooth and predictable reduction towards 15% if the aggregate flow becomes inconsistent with the FPC limit. F

Who is affected

• PRA-authorised banks, building societies, friendly societies, industrial and provident societies, credit unions, PRA-designated investment firms and overseas banks conducting relevant UK branch activities
• Mortgage-lending subsidiaries of PRA-authorised firms, including subsidiaries that are otherwise outside the direct PRA firm scope
• FCA-authorised mortgage lenders that are not subsidiaries of PRA-authorised firms
• Mortgage credit risk, product governance, treasury, regulatory reporting, compliance and senior management functions at affected lenders

Related regulations

• Financial Policy Committee recommendation on high loan-to-income mortgage lending
• PRA Rulebook Housing Part
• PRA Supervisory Statement SS2/26 – High loan to income lending
• PRA Rulebook Risk Control Part
• FCA Senior Management Arrangements, Systems and Controls (SYSC)
• FCA general guidance on high loan-to-income lending replacing FG14/8, FG17/2 and FG25/4