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Santander raises affordability rates

  • 29/08/2023
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Santander raises affordability rates
Santander has increased affordability rates across residential and buy-to-let mortgages.

The change was applied on Friday and saw the residential affordability rate increase in light of the base rate hikes in July and August. 

On its buy-to-let products, the standard affordability rate has risen from 7.59 per cent to 8.52 per cent while the five-year fixed affordability rate has increased from 6.09 per cent to 7.02 per cent. 

Its pound-for-pound buy-to-let remortgage affordability rate has also gone up from 6.09 per cent to 7.02 per cent. 

At the same time, the lender has lowered the interest coverage ratio (ICR) for higher tax band borrowers to 140 per cent, down from 145 per cent. 

Santander said full mortgage application submitted by 10pm on 29 August would not be affected by the updated affordability changes. 

It encouraged advisers to use the website affordability calculators to see what clients may be able to borrow. 


A difficult environment 

Brokers reacted to the raised buy-to-let affordability, saying it was making borrowing harder for landlords. 

Peter Stamford, director and lead adviser at Moor Mortgages, said with affordability going up to 8.52 per cent, borrowing for new and existing properties “becomes a daunting task”. 

“This could force landlords to hike rents, further straining tenants already grappling with high costs,” he added. 

Elliott Culley, director at Switch Mortgage Finance, said this added to the bad news for the buy-to-let market and said lenders needed to be supportive rather than adding further pressure.  

Culley added: “Buy-to-let is once again starting to become a specialist market. Right now if clients want to afford the lending on the buy-to-let, then they’d need to expect high fees or have a good income to utilise top slicing.” 

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