Since the 11th of July 2025, restrictions around high loan-to-income (LTI) mortgages were loosened. Up until then, any mortgage company lending more than £100 million in new residential mortgages over a rolling year, had to keep the share of their loans that were above 4.5 times income at a maximum of 15%.

The cap was designed to keep risk in check, but it tied the hands of some lenders who wanted to do more for borrowers with strong incomes but smaller deposits.

That threshold has now risen to £150 million. Lenders under that level won't be bound by the cap anymore. This gives smaller players more freedom to approve higher-income-multiple-loans. The changes won't hugely affect larger mortgage companies, who typically lend the bulk of residential mortgages. But the shift could influence how they price or position their products in response to increased competition.

It's a technical shift, but the effect could be real, especially for first-time buyers.

Extra flexibility for bigger lenders too

The Prudential Regulation Authority (PRA) is giving larger lenders the chance to apply for a "modification by consent". This means they can temporarily go over the 15% cap as long as they report carefully and the overall share of high-LTI loans in the market doesn't climb above 15%.

This arrangement is set to run until 30th June 2026, unless new rules are introduced sooner. Lenders might have already adjusted their affordability checks or product ranges as a result.

What it means for borrowers

This change could help open doors, particularly for first-time buyers.

Some lenders have responded quickly to the change, adjusting affordability rules or criteria and bringing a range of new options to the market - potentially making space for thousands more first-time buyers each year.

In short, people who've been told "no" in the past might now find they have an option, including those in high-cost areas or with strong incomes but limited deposits.

Get in touch with our friendly and knowledgeable team for more information.