Reductions boost borrower affordability by up to 20%
Digital mortgage lender Molo Finance has reduced buy-to-let stress rates for both its two-year fixed and tracker mortgage products.
The lender said the move aims to assist landlords seeking short-term fixed rate or tracker mortgages.
For two-year fixed rates, the stress test will apply the higher of the pay rate, follow-on rate, or 5.50%. For five-year fixed rates, the calculation will be based on the pay rate.
Tracker rates will use the higher of the pay rate plus 2%, the follow-on rate, or 5.50%. For variable rates, the higher of the pay rate plus 2% or 5.50% will be used.
We are delighted to announce reductions to our 2-year fixed product stress rates, boosting borrower affordability by 20% 📉👏 https://t.co/gY8hP6HULw #molofinance #buytolet #reducedstressrates #affordabilityboost #rentalmarket pic.twitter.com/bB38z0hjrl
— Molo (@molofinance) February 8, 2024
The lender has reduced UK resident two-year fixed product stress rates from 9.94% to 7.94%, enhancing borrower affordability by around 20%. UK resident tracker product stress rates have been lowered from 9.94% to 8.39-9.49%, increasing borrower affordability by up to 16%.
Non-UK resident two-year fixed product stress rates have been cut from 10.99% to 8.99%, boosting borrower affordability by 18%, while non-UK resident tracker product stress rates have been adjusted from 10.99% to 10.49-10.99%, increasing borrower affordability by up to 5%.
The latest changes, Molo said, complement the fixed price rate reductions it announced last month.
“Affordability has been one of the biggest challenges facing landlords over the past 12 months, so we’re delighted to announce a recalibration of our stress test to reflect current market conditions and help support the private rental market,” said Mark Michaelides (pictured), vice president of strategy at Molo Finance. “We will continue to lend responsibly, providing confidence to brokers and borrowers alike.”
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