BoE Weighs Raising High-LTI Mortgage Threshold to 5x Income

The Bank of England’s Financial Policy Committee is reviewing whether to raise the threshold for high loan-to-income (LTI) mortgages to five times household income, up from 4.5 times now. The review follows pressure from lenders and Chancellor John Healey, who urged the committee to improve access to home ownership without undermining financial stability.

Under the current framework, loans of at least 4.5 times individual or joint income count as high-LTI, and the FPC recommends keeping these below 15% of all new residential mortgages. That headroom is almost used up. High-LTI lending reached 14.1% in the current quarter, with a four-quarter rolling average of 12%. Demand is strong at the top of the range, as high-LTI mortgages taken out by first-time buyers rose 66% in 2025.

The potential impact is significant. UK Finance estimates that raising the threshold to five times income could free up extra lending capacity equal to 7% of annual new residential mortgage lending.

Mortgage availability directly shapes bridging exits. A higher threshold would let more buyers borrow enough to complete. That would support chain-break and regulated bridging loans that depend on a mortgage refinance, and it would help developers selling new-build units to first-time buyers. With the aggregate share at 14.1%, however, mainstream lenders may start rationing high-LTI loans before any change arrives. That could leave buyers waiting longer for offers, extend bridging terms and push some loans towards specialist lenders.

Lenders should watch the quarterly PRA figures, the FPC’s next policy record and the 5 November base rate decision. A higher LTI threshold paired with higher rates could still leave affordability stretched.