Accord reduces buy-to-let stress rates

Accord Mortgages has improved its buy-to-let rental calculations.

The lender has reduced its interest coverage ratio rates (ICRR) – the stress rates it applies to buy-to-let affordability calculations.

Where landlords are remortgaging on a like-for-like basis, the ICRR will drop to 6.0% (previously 6.5%), 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 5.5% (previously 6.5%), or product rate plus 1% (whichever is higher).

Where the landlord is purchasing a property or remortgaging with capital-raising, the ICRR will be 6.5% (down from 7.5%) 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 5.5% (preciously 6.5%) or product rate plus 1% (whichever is higher).

The lender’s interest coverage ratio (ICR) calculations 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: “As a buy-to-let lender, continually finding ways to help brokers and the landlords they serve is always at the forefront of our thinking.

“We understand the vital role landlords play in providing the kind of private rented housing which is in increasingly short supply, and are hoping these latest changes will provide much-needed support to them in the current challenging interest rate environment.”