The Mortgage Works (TMW) is set to reduce stress rates for lower-rate taxpayers whilst updating its stress rate policy for further advance applications as of Wednesday 7th December.
TMW said that stress tests will now be linked to the ICR applied to the application.
The move has been broadly welcomed by brokers as one that “may reignite the buy-to-let market”.
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Craig Fish, founder and director at Lodestone Mortgages & Protection:
“This is much-needed and long-overdue news. Interest rate expectations have reduced significantly since the mini-Budget mortgage market massacre, but lenders have been very slow to react.
“Perhaps now there might be some normality returning to the buy-to-let market, though there is still a long way to go yet.
“Once one lender makes a move, others tend to follow, so our fingers are crossed, as will be those of landlords up and down the country.”
Nicola Schutrups, managing director at The Mortgage Hut:
“It’s great to see The Mortgage Works reducing the stress rates back to what was previously the norm within the industry.
“Following the mini-Budget, we saw lenders like TMW increase these stress tests, which has vastly reduced the ability for consumers to borrow what they need and caused the slowing of the buy-to-let market.
“Hopeful moves like this allow more people to start looking at their borrowing options and may reignite the buy-to-let market, which has almost come to a standstill.”
Justin Moy, managing director at EHF Mortgages:
“Improvement to the stress test for buy-to-let mortgages is very welcome from The Mortgage Works, and hopefully will encourage other lenders to follow.
“The stress test will boost the amount landlords can borrow based on the expected rental income, so a combination of lower rates, and a better ICR (Stress Test Ratio) can only be applauded.
“There are still a number of specialist lenders struggling with rates of 6%+, specifically those that are great supporters of portfolio landlords.
“Hoping to see some positive news for the professionals shortly.”
Austyn Johnson, founder at Mortgages For Actors:
“The Mortgage Works were one of the first to rocket their stress rates up, and although this will have eased the pressure from them, they are probably now considering the first quarter of 2023 when they will want to drive business back.
“Currently, after a massive 2022, lenders have filled their quota and are not as bothered. But there could be lots of positive lender activity in 2023.
Gary Boakes, director at Verve Financial:
“The residential Mortgage market has felt like it has been battered the last few months, but the BTL market was an annihilation!
“The rising interest rates and stress test all but killed the BTL market, but is this the light at the end of the tunnel?
“On a day of good news on the residential market with rate reductions, is this the start of the good news for the BTL market, it was always going to take a large lender like TMW to make changes, and hopefully, this will lead to other lenders making similar positive moves.
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“It’s brilliant news that a big lender, like TMW, is reducing its stress test. It will bring more confidence to the buy-to-let market, especially to existing landlords.
“It will give them more potential options when remortgaging. When we had the mini-Budget, lenders, like TMW, increased their stress tests by a huge amount.
“This made even remortgaging to another lender, like for like, impossible in most cases.
“However, unless other lenders follow what TMW have done, it could still mean many landlords sell their investment properties when their products come to an end.”
Matthew Jackson, director at Mint FS:
“With the current market offering nothing but challenges to landlords and in particular portfolio landlords who are struggling with stress tests even for remortgages it is a significant move from TMW to re-assess their stance.
“Typically where Nationwide / TMW move other lenders follow, and a relaxation of the assessment criteria for buy-to-et mortgages is much needed at the moment.
“Albeit this has started with lower tax rate payers, but hopefully this is a sign of things to come and other lenders get creative with solutions for this area of the market.”
