The PRA published a policy statement (PS11/16)  on 24 March 2016, amending its rules on loan to income (LTI) ratios in mortgage lending. 

Following the implementation of the Mortgage Credit Directive (2014/17/EU) (MCD), second and subsequent charge mortgage contracts fall under the definition of a regulated mortgage contract.  The Housing Part of the PRA Rulebook places an LTI flow limit on regulated mortgage contracts, meaning the LTI flow limit would have automatically applied to second and subsequent charge mortgage contracts, which were previously exempt from the LTI flow limit.

In a consultation paper in February 2016 (CP 6/16) the PRA proposed amending the Housing Part of the Rulebook to ensure that these second and subsequent charge mortgages continue to be excluded from the LTI flow limit, with a further consultation to take place once loan level data is available in 2017.  The responses to the consultation paper were positive and the PRA Rulebook: CRR Firms, Non CRR Firms: Housing Instrument 2016 came into force on 25 March 2016 implementing the amendments to the Rulebook.