Paragon lowers rental stress tests on five-year fixes

For houses in multiple occupation (HMO) and multi-units the lender is offering a stress test of 130% at 4%.

Paragon’s regular products are set at 125% at 5.35% for personal landlords and single dwellings, 125% at 5% for limited companies and single properties and 130% at 7% for HMOs.

The products are available until 31 March 2022 and offered at a 75% loan to value. They are available to both personal landlords and limited companies.

Paragon launched its range of five-year fixes last week, saying: “With the outlook for interest rates now much lower for longer, we have been able to deliver these longer-term fixed rates aimed at professional landlords including those borrowing through limited companies and those purchasing HMOs.”

Rates start at 3.75% up to 3.95% depending on the type of fee selected. Paragon offers a £1,999 flat fee for loans up to £500,000, or a 1.5% charge.

The Bank of England cut interest rates 0.25% in August in what was the first movement in seven and a half years. The measure was implemented to protect the UK economy following the Brexit vote in June.

In September, the Monetary Policy Committee voted to maintain the base rate, saying the economy was likely to see little growth in the second half of 2016 but that recent economic reports have been “stronger than expected”.

Barclays also reduced the rate it uses to stress test residential mortgage borrowers by 0.25%, following the Bank of England’s cut to the base rate, last week.

In a note to its brokers, the bank said the the reduced stress test rate would apply to general residential cases including the Help to Buy equity loan scheme which it said would improve residential mortgage affordability for consumers.

The reduced stress test rate now stands at 6.74% and is in immediate effect.