How Changes to Mortgage LTI Rules in the UK Are Helping Borrowers in 2025-26

How Changes to Mortgage LTI Rules in the UK Are Helping Borrowers in 2025-26

The UK mortgage market is evolving, with lenders and regulators adjusting the way Loan-to-Income (LTI) ratios are used in lending decisions. These changes — driven by the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and lenders themselves — are designed to increase access to mortgage finance and ease affordability pressures for many prospective homeowners. The Guardian+1

What LTI Means and Why It Matters

Loan-to-Income (LTI) refers to how many times a borrower’s annual income a lender will allow them to borrow. Historically in the UK, many lenders capped this at around 4.5× income. This strict multiple — especially during periods of higher interest rates and flat wage growth — made it harder for households with modest incomes to buy a home. The Guardian

Changes in regulation and lender policies now mean more flexibility in LTI ratios, meaning borrowers may be able to borrow more relative to their incomes than before.

Regulatory Changes Supporting Higher LTI Lending

1. PRA and FCA Adjust LTI Limits

In mid-2025 the Bank of England’s Prudential Regulation Authority (PRA) began reviewing the flow limit cap on high-LTI mortgage lending. The rule previously limited individual lenders to making no more than 15% of their new mortgage loans at an LTI equal to or greater than 4.5× income. ─ With the PRA offering an interim modification, lenders can temporarily disapply this limit while the rule is reviewed. Bank of England

At the same time, the PRA raised the threshold at which smaller lenders become subject to the LTI cap from £100 m to £150 m of annual mortgage flow — giving challenger banks more flexibility to offer higher LTI lending. tlt.com

The FCA is also consulting on affordability rule changes in 2026 that aim to help first-time buyers and underserved borrowers — indicating a policy direction towards greater accessibility. MoneyWeek

What Lenders Are Doing: More Borrowing Power for Buyers

Responding to the regulatory easing, many UK banks and building societies have already raised their LTI limits:

2. Higher LTI Multiples from Lenders

Many lenders now offer higher multiples than the traditional 4.5×, meaning people can borrow more relative to their income — often critical in high-price markets or for first-time buyers:

• Santander UK now allows borrowers with certain incomes to access up to 5.5× their income, significantly increasing borrowing power compared with previous limits. Santander UK+1
• Skipton Building Society reduced the minimum income threshold for high LTI lending from £50k to £40k, and lets eligible borrowers access up to 5.5× income up to 90% loan-to-value (LTV). Mortgage Professional+1
• Aldermore Bank updated its criteria to allow incomes between £40k–£60k to borrow up to 5.5× income and higher earners up to 6× income, depending on their deposit level. aldermore.co.uk
• Precise (OSB Group) now offers up to 6× LTI for residential borrowers across a wide range of applicant types, including self-employed and those with recent credit issues. Mortgage Professional
• Barclays increased its maximum residential LTI multiple to 6× income for eligible customers with higher household incomes. mortgagesolutions.co.uk
• Yorkshire Building Society has removed the minimum income threshold on 5.5× LTI loans entirely (provided other affordability checks are met), further opening access to high LTI borrowing. theintermediary.co.uk

This wave of stronger LTI flexibility is not just for first-time buyers — though they often benefit the most — but also for home movers and borrowers previously constrained by traditional limits.

Benefits to Borrowers

The practical impacts of higher LTI limits and regulatory changes include:

1. Stronger Borrowing Power

Higher multiples directly increase the size of a mortgage a borrower can access. For example:

• With a household income of £40,000 and a 10% deposit, a 5.5× LTI limit could boost maximum borrowing by £40k+ compared with previous rules under 4.49× criteria. theintermediary.co.uk

This extra borrowing capacity can spell the difference between getting on the ladder and being priced out, especially in markets with rising or high prices.

2. Better Access for First-Time Buyers and Younger Borrowers

National and regional lenders report that these rule changes are helping first-time buyers get a foothold on the property ladder:

• Nationwide’s expansion of its Helping Hand scheme — enabled by higher LTI flexibility — now lets more applicants borrow up to 6× income with lower income thresholds, expected to help 10,000 more buyers annually. Nationwide
• Broader regulatory support for high LTI lending from the Bank of England was explicitly aimed at helping tens of thousands more first-time buyers join the market. The Guardian

3. Support for Self-Employed and Non-Standard Incomes

Some lenders, like Gen H and Precise, have updated their criteria not just to raise LTI multiples but to expand eligibility for self-employed borrowers or those with variable incomes — groups traditionally penalised in mortgage underwriting. Mortgage Professional

4. Flexibility and Choice for All Borrowers

With stress tests and affordability assessments also being refined in some cases (for example, reducing overly conservative buffers), many borrowers find they can qualify for mortgages more aligned with real-world incomes and budgets. Nationwide

Important Considerations

It’s crucial to remember that higher LTI lending does not mean guaranteed approval — lenders still apply affordability tests, credit checks and stress tests to ensure borrowers can afford repayments.

Borrowers should work with mortgage advisers to understand the true affordability, especially if high LTI multiples stretch monthly outgoings close to financial limits.

The Bigger Picture

This shift toward higher LTI flexibility reflects a broader regulatory and market push to improve access to homeownership in the UK after years of affordability challenges. By easing caps and enabling lenders to innovate their criteria, regulators aim to support sustainable lending without undermining financial stability. MoneyWeek

Overall, these changes are a meaningful step toward helping buyers — particularly first-time purchasers and those with modest incomes — unlock larger mortgages and increase their chances of buying a home in 2025-2