UK Finance published its response to the regulators' proposed changes to the high loan-to-income (LTI) flow limit in mortgage lending.

We welcome the direction of travel and support the objective of maintaining strong macroprudential safeguards alongside a more proportionate approach to mortgage regulation.

However, our response argues that the proposals should go further if they are to deliver meaningful benefits for creditworthy first-time buyers and other underserved borrowers.

We recommend that the definition of “high-LTI” lending should be recalibrated from 4.5 times income to 5 times income. Our analysis shows that lending between 4.5- and 5-times income is no riskier than lower-LTI lending. Raising the threshold could free up significant first-time buyer lending without materially increasing default risk or fuelling the credit cycle.

We also highlight concerns about the complexity and operational impact of the proposed quarterly adjustment mechanism, particularly for smaller lenders.

A reformed LTI regime should sit alongside wider housing and growth policy, and with affordability pressures continuing to shape access to home ownership, regulation should remain robust, but also responsive to today’s market conditions.

Our recommendations are designed to preserve financial stability while enabling lenders to support sustainable home ownership for more households across the UK.