Accord Mortgages has announced a series of changes aimed at easing affordability pressures for landlords by reducing its interest coverage ratio rates (ICRR).
The intermediary-only lender’s move is designed to support landlords as they continue to provide essential private rental homes amid challenging market conditions.
The changes, effective today, mean that for landlords remortgaging on a like-for-like basis, the ICRR will now drop to 5.5%, down from 6.0%, or to product rate plus 1%, whichever is higher, for mortgages with an initial term of less than five years. For products with a term of five years or more, the ICRR will decrease from 5.5% to 4.75%.
For landlords purchasing property or remortgaging with capital-raising, the ICRR has also been lowered to 5.5%, down from 6.5%, or to product rate plus 2% for terms of less than five years.
For terms of five years or more, it will be reduced from 5.5% to 4.75%, or product rate plus 1%, whichever is higher.
Accord Mortgages will maintain its interest coverage ratio (ICR) at 125% for basic rate taxpayers and 145% for higher rate taxpayers.
Nicola Alvarez, senior manager for new propositions at Accord Mortgages, said: “Things have been extremely challenging for landlords in recent times, so, as a buy-to-let lender, we’re constantly reviewing our offering to find new ways to help them as much as we possibly can.”
She added that the private rental sector plays a vital role in the economy and hopes the changes will offer much-needed relief to landlords.
