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Platform tightens buy-to-let lending stress tests

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  • 20/09/2016
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Co-operative Bank’s intermediary arm Platform will increase its interest coverage rate and stress rate for buy-to-let applications from Monday.

Platform’s interest coverage ratio will increase from 125% to 145%, with a flat stress rate of 5.5% applied to all applications.

Previously Platform’s stress rate was dependent on loan-to-value ratios and was set at 5% for loans up to 70% LTV, and 5.5% for mortgages up to 75% LTV.

In a broker statement, Platform said the changes were in response to the Prudential Regulation Authority’s (PRA) consultation on stricter underwriting standards for buy-to-let mortgages, published in March this year.

Platform joins Santander, Foundation Home Loans and The Mortgage Works, to name a few, which have tightened affordability requirements for landlords since the PRA’s announcement.

In an interview with Specialist Lending Solutions in May, Mortgages for Business sales director Steve Olejnik said stress testing calculations were likely to get stricter and that 145% was “just the start”.

The changes made by Platform will not affect any pipeline applications, or any applications received before 23 September.

To qualify as a pipeline case, any decision in principles must be completed and application submitted and converted by the 23 September, or will be treated using the new criteria.

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