"We’ve recalibrated our buy-to-let stress rate to reflect current market conditions, which may be of particular help to those looking for a pound-for-pound remortgage."
Coventry for Intermediaries has reduced its buy-to-let stress rate.
The changes benefit those looking to purchase, remortgage, and port their existing buy-to-let mortgage. Like-for-like product transfers do not require a stress test.
The stress rate for all customer types on a 5+ year fixed rate is now 5.5% or the product rate, whichever is higher.
For pound-for-pound remortgages on two and three-year rates, the stress rate is also 5.5% or the product rate +1.0%, whichever is higher.
The rate for purchases on two and three-year rates is 7.0% or the product rate +2.0%, whichever is higher.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “We’ve recalibrated our buy-to-let stress rate to reflect current market conditions, which may be of particular help to those looking for a pound-for-pound remortgage.
“We’re committed to helping our intermediary partners look after their clients, and equally want to support the private rental sector to help provide homes for those choosing to rent.”
Rhys Schofield, managing director at Peak Mortgages and Protection, commented: "It could be that normality may be resuming in the buy-to-let world. Since September, previously easy-to-finance deals have proved much trickier to place with a lender because the numbers and how lenders calculate whether a property is 'self-funding' just haven't stacked up when the lenders 'stress test' whether potential rate rises would make a property not pay for itself. Now that it doesn't appear the world is going to end with rate rises, it's great to see lenders working hard behind the scenes to make buy-to-let mortgages easy to obtain. Tenants could also benefit from this as some landlords have genuinely had to increase rents just to get a case to fit on affordability. Reducing that pressure should hopefully help tenants."
Justin Moy, managing director at EHF Mortgages, added: "The popularity of buy-to-let mortgages overt the past six months has been significantly lower than the preceding years, as rates have increased substantially and made it near impossible to place new cases without large deposits due to Interest Cover Ratio (ICR) needs. Lowering buy-to-let rates and stress tests, whilst residential deals have moved in the opposite direction, shows that lenders need to bring competitive and, more importantly, workable deals to market to support the landlords looking to refinance or purchase. Changes like this from the Coventry BS, and the Foundation Home Loans rate reductions launched today, go a long way to help brokers service their landlords' borrowing needs, and look to get that market more positive and active."
