It reduces rates by up to 70 basis points and eases stress test requirements
Specialist lender West One Loans has announced product changes in its buy-to-let (B2L) arm, including rate reductions and stress test improvements.
The lender’s two- and five-year portfolio rates have been cut by up to 57 basis points (bps) and 54bps, starting from 3.64% and 3.96%, respectively.
The non-portfolio two- and five-year fixed rates have seen reductions of 57bps and 58bps, with new starting rates of 4.32% and 4.5%, respectively.
West One Loans, named one of Mortgage Introducer’s 5-Star Lenders of 2023, has also made substantial cuts to its core and complex fixed rate products, with reductions of up to 70bps. The rates for these products now start at 3.84% for two-year fixes and 4.64% for five-year fixes.
Since the end of last week, the stress test requirements for selected products have also been eased, with the stress rate revised to the higher of 6% or the pay rate, down from the previous 6.5%, for borrowers opting for a variable rate or a fixed rate of less than five years. This change enables borrowers selecting a variable or shorter-term fixed rate to access higher loan amounts.
“Landlords are becoming increasingly optimistic that rates are set to fall, and so many of them are now looking to keep their options open by opting for a variable or short-term fixed rate product,” Andrew Ferguson (pictured), managing director of buy-to-let at West One Loans, commented.
“However, the thing that is stopping many of them from proceeding is that they are not able to borrow as much as they would if they opted for a five-year fixed rate or longer, due to the fact many lenders offer a set rate to calculate affordability.”
Ferguson said West One’s decision to lower its stress rates would give landlords the option to choose a variable or shorter-term fixed rate while still achieving the levels of leverage they need.
“The ability to choose a shorter-term rate gives landlords manoeuvrability and the option to switch into a longer-term fixed rate if and when mortgage rates fall further,” he added. “As a responsible lender, we won’t do anything that puts landlords at risk, which is why we now insist on a stress rate of the higher of 6% or pay rate. This is to ensure we continue to offer flexibility while lending responsibly.”
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