"The private rental sector is crucial to a healthy housing market and economy, so it is important that the industry continues to find ways to support landlords and maintain the availability of quality rental homes across the UK"
- Nicola Alvarez - Accord Mortgages
Rising interest rates in recent years have made it increasingly difficult for landlords to meet affordability criteria. Now that rates have stabilised, the intermediary-only lender is lowering the Interest Coverage Ratio Rates (ICRRs) used in its affordability assessments, allowing brokers to help more landlord clients secure finance while ensuring borrowers can comfortably manage repayments if rates rise again.
For landlords remortgaging on a like-for-like basis, the ICRR for products with a term of five years or more will now be 4.75% or the product rate plus 0.35%, whichever is higher, down from the previous product rate plus 1%. For products with an initial term of less than five years, the ICRR will reduce to 4.75% or the product rate plus 0.70%, compared with product rate plus 1% previously.
For landlords purchasing a property or remortgaging with capital-raising, the ICRR for products with a term of five years or more will now be 4.75% or the product rate plus 0.50%, down from the prior product rate plus 1%. For shorter-term products of less than five years, the ICRR remains unchanged at 5.5% or the product rate plus 2%, whichever is higher. The lender’s interest coverage ratio (ICR) continues to be 125% for basic-rate taxpayers and 145% for higher-rate taxpayers.
Nicola Alvarez (pictured), head of strategic partnerships and propositions at Accord Mortgages, said: “We recognise the increasing pressures landlords are facing, and as a buy-to-let lender, we’re committed to adapting our approach to help them access the finance they need. Refining our affordability criteria allows us to support brokers in helping their landlord clients navigate a challenging landscape without compromising their long-term sustainability."
"The private rental sector is crucial to a healthy housing market and economy, so it is important that the industry continues to find ways to support landlords and maintain the availability of quality rental homes across the UK.”
