NatWest has cut its buy-to-let (BTL) stress rates as of today, Tuesday the 29th of August.
These changes come hot on the heels of Santander increasing their buy-to-let stress rates on Friday.
Its 2-year fixed products will decrease from 8.6% to 8.15%, while its 5-year fixed products will decrease from 7% to 6.78%.
As for the lenders ‘Like for Like’ remortgages, stress rates will be decreased from 8.21% to 7.55%.
In light of these changes, Newspage asked brokers what implications this has for landlords and why NatWest is taking a different path from Santander.
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Ashley Thomas, director at Magni Finance:
“NatWest has taken a positive and common-sense approach to the stress test rates.
“This is what is needed to make it feasible for landlords to be able to remortgage. A step in the right direction.”
Elliott Culley, director at Switch Mortgage Finance:
“Although it’s positive to see any reductions in stress testing by lenders, this move is nothing revolutionary.
“NatWest’s stress test was very high so this move is more an indication that they weren’t getting any buy-to-let mortgage business through the door.
“By reducing it they will hope to have some more applications, but the market remains tough for landlords.”
Riz Malik, founder and director at R3 Mortgages:
“Last week, Santander looked like they were “closing shop” on buy-to-let, but today, NatWest have their “open for business” sign brightly lit.
“Nonetheless, we’re still a distance away from the stress calculations that many landlords require to refinance their current buy-to-let borrowing, particularly in London and the South-East.
“The climate for landlords remains brutal.”
Justin Moy, managing director at EHF Mortgages:
“This is a small improvement from NatWest, at a time when fellow competitors Santander have increased their affordability check rates.
“Both lenders are controlling volumes of business where there is not a significant amount of new buy-to-let lending, as 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.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“Given that we are now seeing interest rates falling back, it makes sense to see the ICR calculations being revised downwards, too.
“Santander’s move to further increase them felt odd and perhaps speaks more to their strategy in terms of business mix than anything else.
“NatWest has decided that they want to attract more buy-to-let business and have taken steps to make that happen.”
Ben Tadd, director at Lucra Mortgages:
“This is a step in the right direction but the stress tests remain very high across the board in the buy-to-let market, meaning it is still a precarious position to be in for any landlords whose mortgage deals are due to end in the next six to 12 months.
“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.”
