FG25/4: Amendments to PRA Rulebook and FCA Guidance concerning the de minimis threshold for the Loan to Income flow limit in mortgage lending

Read FG25/4 (PDF)

Feedback summary and the PRA’s Policy Statement (PDF) 

Why we consulted

The FPC recommended increasing the volume of mortgages a lender needs to make the LTI flow limit apply from £100m per four rolling quarters, to £150m per four rolling quarters. The Prudential Regulation Authority (PRA) give this effect through their Rulebook, and we give this effect through guidance, revised in February 2017 (FG17/2). 

Our response

The FCA and the PRA (collectively ‘the regulators’) proposed these amendments following the FPC’s recommendation. The regulators consulted on the proposed amendments in April 2025 (CP25/6) and the consultation period closed on 8 May 2025. The regulators have published feedback on responses received, as well as the PRA’s Policy Statement and the FCA’s Finalised Guidance.

Who this applies to

The FCA’s finalised guidance is relevant to FCA-authorised mortgage lenders that are not a subsidiary of PRA-authorised firms. The PRA’s amendments to their Rulebook are relevant to mortgage lenders subject to the PRA’s rules, described in paragraph 2.7 of the consultation paper CP25/6.

Background

The LTI flow limit ensures that mortgage lenders limit the number of new residential mortgage loans made with an LTI ratio at, or greater than, 4.5 to no more than 15% of their total number of new mortgage loans per annum.

Prior to this publication, the de minimis threshold exempted from the LTI flow limit lenders that extend residential mortgages of less than £100m in value or fewer than 300 in number per annum.

The change seeks to address inadvertent regulatory tightening by increasing the value of residential mortgage lending that small lenders can extend before becoming subject to the LTI flow limit, thereby contributing to the regulators objectives on competition, and therefore competitiveness and growth.

This publication is separate to the FCA’s Mortgage Rule Review.