If you've been struggling to get on the property ladder because of strict borrowing limits, things may be about to change. The Bank of England’s Prudential Regulation Authority (PRA) is currently reviewing a key mortgage rule that could make it easier for first-time buyers to access larger loans.
So, what’s changing?
At the moment, mortgage lenders are only allowed to offer up to 15% of their new residential mortgages with a loan-to-income (LTI) ratio of 4.5 or higher. That means if you earn £40,000 a year, you'd usually be capped at borrowing £180,000 – even if your income is stable and your outgoings are low.
In expensive areas like London or the South East, that cap has made it especially difficult for first-time buyers to get a foot on the ladder.
But now, in a new move announced on 9 July 2025, the PRA has introduced a temporary “Modification by Consent” — essentially allowing lenders, on request, to go beyond the 15% cap for a limited time, through 30 June 2026.
Why is this happening?
This change comes after a recommendation from the Financial Policy Committee to revisit whether the existing limits are still suitable. With rising property prices and evolving lending practices, the Bank of England is testing more flexibility for lenders to assess borrowers individually—rather than with a blanket restriction.
What does it mean for me as a first-time buyer?
If you’ve been told in the past that you couldn’t borrow enough — even with good credit, stable income, and a strong deposit — this change could open doors:
- More lenders may be willing to consider 4.5×–5× income ratios
- Affordability tests still apply, but with fewer blanket restrictions
- More tailored decisions could help you buy where previously you couldn't
- It could mean moving sooner—or buying in a better location
Is this guaranteed?
Not quite. This change doesn’t mean all lenders will offer bigger mortgages overnight. Each lender must apply for the modification and submit regular reporting to the PRA. So, you may see some lenders becoming more flexible—while others remain cautious.
But the big picture is clear: first-time buyers now have more potential borrowing options than before.
What should you do now?
- Speak to a mortgage broker – ask if any lenders they work with are offering high-LTI mortgages under the new rules.
- Review your affordability – just because you can borrow more, doesn’t always mean you should.
- Get your paperwork ready – having proof of income, deposit, and clean credit will speed things up.
Final Thought
This is a positive step for first-time buyers—especially in high-demand areas. While it's not a magic fix for the affordability crisis, it’s a meaningful shift in lending policy that could help more people finally make their homeownership dream a reality.