Buy-to-let portfolio stress test rates cut by Landbay

Landbay says the new rates reflect a more prudent approach to portfolio landlord lending in response to the recent Prudential Regulation Authority (PRA) changes.

However, if an applicant should fail the test, the lender says it may consider applications using up to 10% of the declared income, subject to a minimum personal income of £100,000.

The move follows an announcement last week that Landbay has extended its lending criteria to include first-time landlords who don’t currently own a residential property.

In response to the PRA ruling that lenders must take into account borrowers’ affordability when applying for BTL mortgage applications, many lenders imposed a coverage ratio of 145% on all customers, with the PRA’s prescribed interest rate of a minimum of 5.5%.

However, Paul Brett, managing director of intermediaries at Landbay, thinks that lenders need to adapt their strategies to meet a changing BTL landscape.

“The buy-to-let market is set to become more complex in 2018, and as landlords move to navigate the changing environment, so too must lenders ensure that their approach to lending is robust,” commented Brett.

He added: “This is why we have chosen to refine our underlying portfolio stress tests, demonstrating our ongoing commitment to portfolio landlords.”