Accord reduces buy-to-let stress rates

Accord Mortgages is reducing its interest coverage ratio rates (ICRR), the stress rates it applies to buy-to-let affordability calculations.  

The changes mean that where landlords are remortgaging on a like-for-like basis, the ICRR will drop to 5.5% (previously 6.0%), or product rate plus 1% (whichever is higher) for products with an initial term of less than five years. For products with a term of five years or more, the ICRR will be 4.75%, down from 5.5%, or product rate plus 1%.

Where the landlord is purchasing a property or remortgaging with capital-raising, the ICRR will be 5.5% (was 6.5%) or product rate plus 2% (whichever is higher) for mortgages with a term of less than five years. For product terms of five years or more, the ICRR will reduce to 4.75% (was 5.5%) or product rate plus 1%.

The lender’s interest coverage ratio (ICR) will remain at 125% for all basic rate taxpayers and 145% for all 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.

“The private rental sector is crucial to the functioning of our economy, therefore it’s so important that we, as an industry, continue to look for opportunities to support landlords. We hope this change will come as welcome news.”