TMW, which is part of the Nationwide Group, is introducing a stressed rate of 5.49% on applications between 65% and 75% loan-to-value (LTV).
The mutual said existing stressed rates will remain unchanged, as will those for fixed rate terms of five years or more.
It said: “The move is designed to strengthen landlords’ abilities to withstand future Bank of England base rate rises, helping them manage their cashflow beyond the maturity of their deal period. The majority of customers will be unaffected by the changes.”
TMW’s rental calculation will continue to use the higher of either the stressed rate or product rate against a rental cover position of 125%.
Henry Jordan, managing director of TMW, said: “As a responsible lender, we continually review our criteria and these changes are intended to give an extra measure of protection to our customers.
“Tiering stressed rates by LTV ensures alignment to our pricing structure and reflects the likely options available to landlords when their existing product matures. Maintaining a stressed rate of 4.99% on five-year fixed rates recognises the additional payment security that longer term products provide. Together, these changes strike the right balance between prudence and supporting the market.”
Intermediaries are able to submit applications on existing terms until 8pm on 19 November 2014.
