Paragon Bank has announced a reduction in rates for its 5-year fixed-rate buy-to-let mortgages, with cuts of up to 0.70%. This move is accompanied by a decrease in the reference rate and adjustments to loan criteria.
The rate for 5-year fixed mortgages with a 5% fee has been reduced from 5.20% to 4.50% for single self-contained property purchases or remortgages.
For energy-efficient homes with an EPC rating of A-C, the rate is even lower at 4.45%. Rates for Houses in Multiple Occupation (HMOs) and Multi-unit blocks (MUBs) are now set at 4.70%.
Following the reduction in the reference rate from 5.50% to 5.00%, Paragon has recalibrated its interest coverage ratios (ICR) to align with initial rates, except for products under 5%, where ICRs are calculated at 5.00%.
Additionally, the bank has extended the maximum loan term from 25 years to 35 years and reduced the required experience for buy-to-let landlords applying for HMO & MUB loans, from three years to two.
Other notable rate reductions include a 0.55% cut, from 5.94% to 5.39%, on a 5-year fixed-rate product with no fee, which also offers £750 cashback. The rate for loans on properties with an EPC rating of C or above is slightly lower at 5.34%, increasing to 5.59% for HMOs and MUBs.
These products are available for landlords applying through limited company structures or in personal names in England, Scotland, and Wales, with a maximum loan-to-value (LTV) of 75%.
Louisa Sedgwick, commercial director at Paragon Bank, said: “It’s great to get the year off to a positive start by taking up to 0.70% off our 75% LTV 5-year fixed-rate mortgages.
“With a mix of 5% and nil fee options, some with £750 cashback, we’re aiming to offer products that work for more landlords.
“This is also a key driver in our decision to reduce our reference rate from 5.50% to 5.00%.
“We’ve listened to brokers who have told us that the most important consideration for their clients when sourcing mortgages is affordability so calculating ICRs at a lower rate will help with this.
“Additionally, we have eased some of our criteria across the maximum loan term and minimum experience for HMO and MUB applications.”
