What does PRA's "SS2/26 – High loan to income lending" change?

SS2/26 defines high-LTI lending as regulated mortgage contracts where credit is at least 4.5 times the relevant individual or joint income. It applies to firms within the Housing Part of the PRA Rulebook, including relevant UK subsidiaries, and requires high-LTI lending to be conducted prudently under an appropriate risk-management and compensating-controls framework. Where a firm changes its risk management to increase high-LTI flow above 15%, the PRA expects supervisory engagement, effective governance, risk appetite limits and management information covering current and expected future flow, concentrations, high-risk segments and mortgage performance. Firms above the de minimis threshold must monitor the PRA’s quarterly published aggregate high-LTI measure and maintain the capability to reduce future lending. If the aggregate measure is judged inconsistent with the FPC’s 15% limit, the PRA and FCA may require firms with individual four-quarter high-LTI flow above 15% to reduce the excess above 15% progressively. The adjustment will apply to future lending decisions rather than existing approved offers, and the PRA may use a fractional reduction mechanism over successive quarters. The aggregate measure will be calculated from FCA Product Sales Data using four calendar-quarter reporting periods and will exclude buy-to-let, second charge, further advance, lifetime, retirement interest-only and unchanged-principal remortgage contracts. Independent industry commentary has characterised the change as giving lenders greater flexibility to set high-LTI strategies while retaining strong governance, affordability assessment and market-wide controls; industry bodies have also supported the aggregate-cap approach while raising questions about the calibration of the 4.5-times definition.

PRA-authorised banks entering into regulated residential mortgage contracts PRA-authorised building societies and other mortgage lenders within the Housing Part of the PRA Rulebook Relevant UK subsidiaries of PRA-authorised groups that enter into regulated mortgage contracts Mortgage-lending groups with more than one firm above the de minimis threshold

What should firms consider doing?

Firms should determine whether they were below the de minimis threshold in both relevant consecutive four-quarter periods, using both the £150 million total-credit and 300-contract tests. Mortgage risk and compliance teams may wish to validate the firm’s classification of high-LTI contracts at the 4.5-times income threshold and confirm that excluded products are correctly removed from internal and regulatory monitoring. Boards and senior management may wish to approve explicit high-LTI risk appetite limits and management information covering current flow, forecast flow, concentrations, high-risk segments, arrears and performance outcomes. Firms considering a strategy that would increase high-LTI flow above 15% should prepare evidence of the supporting risk-management changes and discuss them through regular PRA supervisory engagement. Firms above the de minimis threshold should establish controls to reconcile internal high-LTI flow data with FCA Product Sales Data and the PRA’s quarterly aggregate publication, including a process for handling revised data. Mortgage lenders should maintain credible scenario plans for reducing future high-LTI originations, including underwriting, product, pricing, distribution and pipeline controls, while distinguishing future lending decisions from existing approved offers. Groups should document whether high-LTI governance and monitoring are operated at individual-firm or group level and ensure that group-level calculations include only relevant firms above the de minimis threshold. Compliance teams may wish to monitor future PRA and FCA announcements for any fractional reduction rate, implementation timetable or withdrawal of adjustment expectations, since SS2/26 does not prescribe a permanent reduction rate in advance.

🇬🇧 PRA Guidance medium

SS2/26 – High loan to income lending

Published 14 October 2026 | United Kingdom

AI Analysis

The PRA has published SS2/26, establishing supervisory expectations for firms undertaking high loan-to-income mortgage lending while moving operational focus from a firm-level 15% cap to monitoring the aggregate market against the FPC’s 15% limit. Firms above the £150 million or 300-contract de minimis thresholds will need board-level oversight, risk appetite controls, quarterly monitoring and the ability to reduce future high-LTI lending if the PRA and FCA determine that aggregate lending is inconsistent with the limit.

Key dates

2026-10-14: PRA publishes SS2/26 – High loan to income lending. The statement sets out supervisory expectations and the quarterly aggregate-monitoring framework.

Suggested considerations

Firms should determine whether they were below the de minimis threshold in both relevant consecutive four-quarter periods, using both the £150 million total-credit and 300-contract tests.
Mortgage risk and compliance teams may wish to validate the firm’s classification of high-LTI contracts at the 4.5-times income threshold and confirm that excluded products are correctly removed from internal and regulatory monitoring.
Boards and senior management may wish to approve explicit high-LTI risk appetite limits and management information covering current flow, forecast flow, concentrations, high-risk segments, arrears and performance outcomes.
Firms considering a strategy that would increase high-LTI flow above 15% should prepare evidence of the supporting risk-management changes and discuss them through regular PRA supervisory engagement.
Firms above the de minimis threshold should establish controls to reconcile internal high-LTI flow data with FCA Product Sales Data and the PRA’s quarterly aggregate publication, including a process for handling revised data.
Mortgage lenders should maintain credible scenario plans for reducing future high-LTI originations, including underwriting, product, pricing, distribution and pipeline controls, while distinguishing future lending decisions from existing approved offers.
Groups should document whether high-LTI governance and monitoring are operated at individual-firm or group level and ensure that group-level calculations include only relevant firms above the de minimis threshold.
Compliance teams may wish to monitor future PRA and FCA announcements for any fractional reduction rate, implementation timetable or withdrawal of adjustment expectations, since SS2/26 does not prescribe a permanent reduction rate in advance.

What changed

SS2/26 defines high-LTI lending as regulated mortgage contracts where credit is at least 4.5 times the relevant individual or joint income. It applies to firms within the Housing Part of the PRA Rulebook, including relevant UK subsidiaries, and requires high-LTI lending to be conducted prudently under an appropriate risk-management and compensating-controls framework. Where a firm changes its risk management to increase high-LTI flow above 15%, the PRA expects supervisory engagement, effective governance, risk appetite limits and management information covering current and expected future flow, concentrations, high-risk segments and mortgage performance. Firms above the de minimis threshold must monitor the PRA’s quarterly published aggregate high-LTI measure and maintain the capability to

Compliance impact

This is a significant supervisory development rather than a standalone numerical relaxation: firms may obtain greater strategic flexibility above 15%, but must be able to evidence prudent underwriting, board oversight, meaningful management information and rapid control of future flow if aggregate lending breaches the FPC’s 15% limit. The PRA may engage firms where risk-management changes increase

Who is affected

PRA-authorised banks entering into regulated residential mortgage contracts
PRA-authorised building societies and other mortgage lenders within the Housing Part of the PRA Rulebook
Relevant UK subsidiaries of PRA-authorised groups that enter into regulated mortgage contracts
Mortgage-lending groups with more than one firm above the de minimis threshold

PRA Rulebook Housing Part
PRA Rulebook Risk Control Part
Financial Policy Committee 15% aggregate high-LTI limit
SS5/16 – Corporate governance: Board responsibilities
FCA Product Sales Data reporting requirements
FCA general guidance on the high-LTI flow limit

References

AI-generated analysis. May contain errors or omissions — verify with the original PRA source before acting. Full disclaimer.

What the PRA said

Supervisory statement 2/26

Published by PRA . Read the full notice at the source for the authoritative text.

Sectors

Mortgage & Lending Banking & Credit

Topics

Prudential / Capital Requirements Senior Managers / Governance Reporting & Disclosure

Relevant Firm Types

BankAll Firms

View Original on PRA Back to Feed