West One Loans eases BTL stress test requirements and cuts mortgage rates

West One Loans’ buy-to-let (BTL) arm has cut rates by up to 0.70% and eased its stress test requirements for selected products.

On 5th January, the lender lowered the stress rate for any borrower opting for a variable rate or a fixed rate of less than five years to the higher of 6% or pay rate, down from 6.5% before.

Borrowers opting for a variable or shorter-term fixed rate will be able to borrow much more than before.

For example, on a typical £300,000 property with a 5% rental yield, a basic rate taxpayer or limited company borrower would be able to borrow £15,385 more than previously.

As well as reducing its stress test rate, the lender also significantly enhanced its rates.

West One Loans cut its 2-year and 5-year portfolio rates by up to 0.57% and 0.54%, respectively, meaning they now start from 3.64% and 3.96%.

Moreover, it slashed its non-portfolio 2-year and 5-year fixed rates by 0.57% and 0.58%, respectively, which now start at 4.32% and 4.5%.

The lender also cut its core and complex fixed rate products by up to 0.70%, with rates now starting at 3.84% for 2-year fixes and 4.64% for 5-year fixes.

Andrew Ferguson (pictured), managing director of buy-to-let at West One Loans, said: “Landlords are becoming increasingly optimistic that rates are set to fall and so many of them are now looking to keep their options open by opting for a variable or short-term fixed rate product.

“However, the thing that is stopping many of them from proceeding is that they are not able to borrow as much as they would if they opted for a 5-year fixed rate or longer, due to the fact many lenders offer a set rate to calculate affordability.

“Our decision to lower our stress rates will give landlords the option to choose a variable or shorter-term fixed rate while still achieving the levels of leverage they need.”

He added: “The ability to choose a shorter-term rate gives landlords manoeuvrability and the option to switch into a longer-term fixed rate if and when mortgage rates fall further.

“But, as a responsible lender, we won’t do anything that puts landlords at risk, which is why we now insist on a stress rate of the higher of 6% or pay rate.

“This is to ensure we continue to offer flexibility while lending responsibly.”