The increase will apply to mortgages over 65% loan-to-value (LTV). Mortgages which are less than or equal to 65% LTV will still be assessed against the notional rate of 5%.

Pipeline applications, including accepted decision-in-principles which have been keyed before 8pm on 11 January, will not be affected by the changes unless they fail to go ahead and have to be resubmitted at a later date.

Several lenders have taken the decision to amend their buy-to-let affordability calculations following George Osborne’s decision to decrease the amount of tax relief which landlords could claim on their mortgage interest payments.

From April 2017, the government will begin to phase out the higher rate of rate tax relief gradually over a period of four years. Those who have a buy-to-let property will no longer be able to claim 45% tax relief on their monthly payments, instead they will only be able to claim the basic rate of 20%.

In November, Barclays upped its rental cover ratio from 125% to 135% while maintaining its notional rate of interest at 5.79%. The lender said the changes in the tax regime would increase costs for landlords which meant it needed to change its calculator to reflect the added pressures.

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