This move is in response to guidance from the Financial Conduct Authority (FCA), which reminded lenders of the flexibility they had around mortgage affordability. Investec’s changes will apply to variable and fixed mortgage rates and will result in residential stress rates falling by as much as 2.1%.
The lender said HNW clients applying for a mortgage would now be able to borrow between 10% and 30% more than before, depending on their circumstances, affordability and loan-to-income (LTI) limits.
For example, a borrower with an income of £300,000 and no dependants or debt with a £66,000 annual expenditure in need of a 25-year term mortgage at 80% loan to value (LTV) could potentially borrow £1.09m on a two-year fix, compared to £949,000 previously.
If this borrower wanted a two-year tracker, they could potentially borrow £1.07m, up from £949,000.
For someone with an income of £550,000, two dependants, £5,000 monthly debt and £128,000 yearly expenditure wanting a 25-year term mortgage on a 70% interest-only and 15% capital and interest basis, they could borrow up to £1.35m on a two-year fixed deal of £1.34m on a two-year tracker, compared to £1.1m before.
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Peter Izard (pictured), head of intermediary business development at Investec Bank, said: “These changes will enable our clients to secure the property they want by increasing their borrowing capacity. We have already reduced rates in both fixed and variable rate products and halved our residential mortgage arrangement fees, making us even more competitive in the market.
“In response to the recent FCA guidance, we have now reduced our stress rates, allowing high-net-worth clients to access higher loan amounts. This ensures that Investec continues to serve our clients with the service and flexibility they need to fulfil their lending aspirations.”
