The Bank of England's Financial Policy Committee is examining whether to raise the cap on high-risk mortgages to five times household income, up from the current 4.5 times, according to reporting by the Financial Times. The change would allow more borrowers to access larger loans without triggering the high loan-to-income (LTI) classification.
Currently, mortgages worth 4.5 times or more of a borrower's income are classified as high-LTI loans. The Committee has recommended keeping such lending below 15% of total new residential mortgages market-wide. In the current quarter, high-LTI lending reached 14.1%, with a four-quarter rolling average of 12%.
The Bank of England's Prudential Regulation Authority and Financial Conduct Authority implemented framework changes on October 28, removing individual 15% caps for lenders while retaining the aggregate market-wide limit.
Raising the threshold to five times income could free up lending capacity equivalent to 7% of annual new residential mortgage lending, according to UK Finance estimates cited by the FT. High-LTI mortgages taken out by first-time buyers rose 66% in 2025.
The Bank of England said it regularly reviews housing-related policy tools in light of the Financial Policy Committee's objectives. The review occurs as UK house price growth slowed to 0.5% annually in October from 0.8% in September, with prices unchanged month on month, according to Nationwide data published Friday.