The optoelectronic properties of metal-halide perovskites (MHPs) are affected by lattice fluctuations. Using ultrafast pump-probe spectroscopy, we demonstrate that in state-of-the-art mixed-cation MHPs ultrafast photo-induced bandgap narrowing occurs with a linear to super-linear dependence on the excited carrier density ranging from 1017 cm−3 to above 1018 cm−3. Time-domain terahertz spectroscopy reveals carrier localization increases with carrier density. Both observations, the anomalous dependence of the bandgap narrowing and the increased carrier localization can be rationalized by photo-induced lattice fluctuations. The magnitude of the photo-induced lattice fluctuations depends on the intrinsic instability of the MHP lattice. Our findings provide insight into ultrafast processes in MHPs following photoexcitation and thus help to develop a concise picture of the ultrafast photophysics of this important class of emerging semiconductors.