"Interest rate expectations have reduced significantly since the mini-Budget mortgage market massacre, but lenders have been very slow to react."
From today, The Mortgage Works is reducing buy-to-let stress rates for lower rate tax payers whilst updating its stress rate policy for further advance applications.
Stress rates will now be linked to the ICR applied to the application.
In October, TMW introduced a flat stress rate of 8.49% during a period of turbulence in the markets following the government's mini-Budget. It later returned to a more tailored approach to stress rates based on the product term and type.
Craig Fish, founder and director at Lodestone Mortgages & Protection, said: "This is much needed and long overdue news. Interest rate expectations have reduced significantly since the mini-Budget mortgage market massacre, but lenders have been very slow to react. Perhaps now there might be some normality returning to the buy-to-let market, though there is still a long way to go yet. Once one lender makes a move, others tend to follow, so our fingers are crossed, as will be those of landlords up and down the country."
Nicola Schutrups, managing director at The Mortgage Hut, commented: "It's great to see The Mortgage Works reducing the stress rates back to what was previously the norm within the industry. Following the mini-Budget, we saw lenders like TMW increase these stress tests, which has vastly reduced the ability for consumers to borrow what they need and caused the slowing of the buy-to-let market. Hopeful moves like this allow more people to start looking at their borrowing options and may reignite the buy-to-let market, which has almost come to a standstill."
Justin Moy, managing director at EHF Mortgages, said: "Improvement to the stress test for buy-to-let mortgages is very welcome from The Mortgage Works, and hopefully will encourage other lenders to follow. The stress test will boost the amount landlords can borrow based on the expected rental income, so a combination of lower rates, and a better ICR can only be applauded. There are still a number of specialist lenders struggling with rates of 6%+, specifically those that are great supporters of portfolio landlords. Hoping to see some positive news for the professionals shortly."
Matthew Jackson, director at Mint FS, added: "With the current market offering nothing but challenges to landlords and in particular portfolio landlords who are struggling with stress tests even for remortgages, this is a significant move from The Mortgage Works to reassess their stance. As a rule, where Nationwide and The Mortgage Works go, other lenders follow, and a relaxation of the assessment criteria for buy-to-let mortgages is much needed at the moment. Though this has started with lower tax rate payers only, hopefully this is a sign of things to come and other lenders get creative with solutions for this area of the market."
