The stress test for two-year fixed mortgages has declined from 8.6 per cent to 8.15 per cent, while for five-year fixes this has fallen from seven per cent to 6.78 per cent.
On like-for-like remortgages, the stress rate is now 7.55 per cent, down from 8.21 per cent.
Controlling business volumes
While brokers welcomed the reduction in stress rates, it was noted that following Santander’s decision to raise its own this was simply a sign of lenders managing volumes.
Justin Moy, managing director at EHF Mortgages, said it was a small improvement and a sign of controlling business where there was not much new buy-to-let lending.
Moy said the “vast majority of borrowers are exercising product transfers with current lenders, and many smaller landlords are looking to sell.
“Those with larger portfolios will be working with specialist lenders who offer a different type of proposition, whereas high street lenders will hopefully concentrate on bringing down the cost of residential borrowing over the coming months.”
Ben Tadd, director at Lucra Mortgages, said it was a step in the right direction, but stress tests remained “very high across the board in the buy-to-let market”
He added: “Until stress tests come down more significantly, the buy-to-let market will remain stagnant in the immediate future, with landlords being very restricted in terms of products they are eligible for.”
Ashley Thomas, director at Magni Finance, applauded the lender and said the change was needed to “make it feasible for landlords to be able to remortgage”. He added: “A step in the right direction.”
Barclays cuts mortgage rates
Barclays has reduced mortgage rates for existing residential and buy-to-let borrowers by between 0.1 and 0.2 per cent.
The changes are effective from today and include a two-year fix at 60 per cent loan to value (LTV) with a £999 fee. This has been reduced from 6.13 per cent to 5.98 per cent.
The five-year fixed equivalent has been cut from 5.52 per cent to 5.37 per cent.
On its five-year fixed reward mortgage at 75 per cent LTV and higher with a £999 fee, the bank has reduced the rate from 5.54 per cent to 5.39 per cent.
Meanwhile, its buy-to-let remortgage-only product, which is fixed for two years, has no fee and is available at 60 per cent LTV has gone down to 6.5 per cent, from 6.7 per cent. The five-year fixed corresponding mortgage has gone down from 5.99 per cent to 5.79 per cent.
