Charlotte Harrison (pictured), CEO of home financing at Skipton Building Society said that it would be increasing the rate from 5.49 per cent to 5.89 per cent for new customers.
She explained: “The increased rate reflects the recent changes within the mortgage market, we have repriced the product fairly to ensure it remains on the market at a competitive rate. The rate change will not impact existing customers who’ve recently taken out the fixed rate product at 5.49 per cent.”
Harrison said that as a responsible lender it needed to be “sensible with our approach to market with this product to ensure tenants don’t take on more than they can realistically afford”.
“The track record mortgage has been carefully designed to ensure anyone applying for the product will not pay any more than what they’re currently paying in rent. Therefore, the rate increase will not increase the monthly payments beyond what a person is already used to paying in rent,” she noted.
Brokers who have submitted applications prior to 16 June will secure the 5.49 per cent rate and their loan amount will remain unchanged.
Affordability changes
The mutual said that the interest rate would impact the maximum loan that a customer could borrow, and the affordability calculator would be updated on 16 June.
The lender brought out the product in May aimed at helping renters get onto the property ladder without the Bank of Mum and Dad or guarantors.
The product is a five-year fixed rate term with rates priced 5.49 per cent for a maximum term of 35 years.
Eligible tenants can access between 95 and 100 per cent LTV, comes with a maximum loan size of £600,000, and applicants can have no missed payments on debts or credit commitments in the last six months.
There are no fees and subject to affordability and credit score there must also be evidence of 12 months of a good track record of rental payments.
The lender added that it would make sure monthly mortgage payments were not more than the average of their last six months rental costs paid.
The product has been welcomed by brokers, who said that it could help a specific cohort of first-time buyers.
