For mortgage deals fixed for less than five years or on a variable rate, Bank of Ireland will assume a stress rate of 5.5%, while for products that are fixed for five or more years it will apply a 5% rate.
Rental income for buy-to-let mortgages is required to be at least 145% of the monthly stressed interest rate, including any product fees added to the loan.
Alison Pallett, director of sales, Bank of Ireland UK Mortgages, said: “These changes have been undertaken in order to comply with PRA regulation, which requires lenders to apply a minimum stress rate. This will further ensure any lending undertaken is done responsibly, and our new assessments will continue to form part of an ongoing robust underwriting practice.”
Many lenders changed their affordability assessments toward the end of 2016, ahead of the PRA’s 1 January 2017 deadline. Changes to how portfolio landlords are assessed will be introduced from 30 September.