Whittaker highlighted the increase in stress test levels initiated by The Mortgage Works (TMW), for example, and suggested that when making a historical comparison the maximum leverage available to borrowers was not being significantly impacted.
Speaking at FSE Manchester, on TMW’s recent move from 125% to 145% Whittaker said: “[Given] this is supposed to be a ‘seismic shift’ that we’re all worried about, with 145% [on an average yield] of 5.8% the maximum leverage available is still 73% LTV. Since January the yield has not changed and the maximum leverage is down from 84%, but the product limit was 80% anyway. This is not an Armageddon moment.”
He did however say that TMW’s ‘first mover’ status in the marketplace to 145% may only be the beginning with the mathematical equation suggesting that 156% was the appropriate stress test for higher-rate taxpayers post-2020 when the mortgage interest rate tax relief changes are in place.
Whittaker did also stress that a limited company, regardless of profitability, will be stress tested at 125%.
However, when it comes to personal buy-to-let there are already lenders making initial steps and fine-tuning stress tests upwards including Woolwich, Paragon, BM Solutions and Kent Reliance, he added.
On the CP11/16 [on buy-to-let mortgage underwriting] announcement in Q3 2016 he said: “I think it is a done deal rather than a consultation.”