Accord Mortgages has reduced stress rates on buy-to-let (BTL) mortgage calculations, which it said would support landlord affordability.
For landlords remortgaging on a like-for-like basis, Accord Mortgages’ interest coverage ratio rates (ICRRs) have been cut from 6% to 5.5% or the product rate plus 1%, whichever is higher. This will apply to products with an initial term of fewer than five years.
For mortgages with an initial term of five years or more, the ICRR has gone from 5.5% to 4.75% or the product rate plus 1%, whichever is higher.
Where a landlord is buying a property or remortgaging with capital raising, the ICRR will be 5.5%, previously 6.5%, or the product rate plus 2%, whichever is higher. This will be for mortgages with an initial term of fewer than five years.
For products with an initial term of five years or longer, the ICRR will go down from 5.5% to 4.75%, or the product rate plus 1%, whichever is higher.
Accord Mortgages’ interest coverage ratio (ICR) will remain at 125% for all basic-rate taxpayers and 145% for higher-rate taxpayers.
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Nicola Alvarez, senior manager for new propositions at Accord Mortgages, said: “Things have been extremely challenging for landlords in recent times, so, as a buy-to-let lender, we’re constantly reviewing our offering to find new ways to help them as much as we possibly can.
“The private rental sector is crucial to the functioning of our economy, therefore it’s so important that we, as an industry, continue to look for opportunities to support landlords. We hope this change will come as welcome news.”
Last month, the lender made rate reductions to a number of products, including its £5k Deposit Mortgage.
