Stress rates were adjusted to reflect current market conditions
Coventry for Intermediaries has reduced its buy-to-let stress rate to support landlords who are looking to purchase, remortgage, and port their existing BTL mortgage.
Stress rate, for all customer types, on a five-year or longer-term fixed rate is now 5.5% or the product rate, whichever is higher.
The stress rate, for pound for pound remortgages, on two and three-year rates is 5.5% or the product rate plus 1%, whichever is higher.
Meanwhile, the stress rate, for purchases, on two- and three-year rates is 7% or the product rate plus 2%, whichever is higher. Like for like product transfers do not require a stress test.
Buy-to-let product transfers will be subject to rental stress, testing at the applicable rate, if the current product is a fixed rate with a scheme period of five years or longer, and the selected scheme period is shorter than the scheme period remaining on the current product.
“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,” said Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society.
“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.”
Easier?
Asked whether buy-to-let deals were starting to get easier to place, with rates starting to decrease, Rhys Schofield, managing director at Peak Mortgages and Protection, said 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,” he said. “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 that the popularity of buy-to-let mortgages over 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 BTL rates and stress tests, while 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,” Moy commented.
“Changes like this from the Coventry BS, and the Foundation Home Loans rate reductions also launched on Friday, go a long way to help brokers service their landlords’ borrowing needs, and look to get that market more positive and active.”
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