This brief summarises research discussed by Bank Underground on 1 October 2026. It describes modelling and historical studies, rather than a forecast of actual lending or borrowing costs.
Phased implementation and capital requirements
The UK output floor is due to start at 60% on 1 January 2027 and reach 72.5% on 1 January 2030. The research explains that the constraint can make corporate loans less costly in regulatory capital terms relative to some mortgages. This does not mean that customer interest rates will necessarily fall.
Model results depend on assumptions
In a simulation of a positive technology shock, corporate lending ends around 0.2 percentage points higher and mortgages 0.4 percentage points lower than under the comparison regime. These are differences between modelled outcomes, rather than observed changes or predicted growth rates. The analysis sets aside a binding leverage ratio, and the author identifies that limitation as an area for further research.
