On like-for-like remortgage lending, the society will now apply a stress rate of one per cent above its Standard Mortgage Rate (SMR) of 4.24 per cent making it 5.24 per cent.
Previously the society applied its standard stress rate of three per cent above SMR which made the rate 7.24 per cent. The change means those remortgaging on a like-for-like basis are more likely to pass the affordability criteria.
The change only applies to borrowers remortgaging to Nationwide without additional borrowing and to be eligible for the lower stress rate, borrowers can only remortgage up to their existing mortgage value. If a product fee applies to the mortgage, this can be added but borrowers can not add early repayment charges to the loan.
Nationwide has also updated its affordability calculator so brokers can check how much a client could borrow before they apply.
Henry Jordan (pictured), Nationwide Building Society’s director of mortgages, said: “Affordability can be a barrier to better mortgage rates, even when applicants are able to demonstrate a clean payment history.
“This change improves access to our competitively priced remortgage products for such borrowers, while maintaining a prudent, responsible approach to affordability assessment.”
Martin Reynolds, CEO of SimplyBiz Mortgages, added: “The issues that many borrowers have faced when looking to remortgage without additional borrowing has been a source of frustration within the intermediary market for a while.
“The stress rates used seem excessive versus where the money market sees long term swaps. It is really positive to see one of the main high street lenders move their stress rate to a more realistic figure. I am sure that this will be a seen as a positive move with both intermediaries and their clients.”