Affordability lifted as Redwood cuts stress rates

Landlords and brokers are set to benefit from an affordability boost, according to Redwood Bank, as the lender announced that it has lowered its residential buy-to-let and commercial mortgage stress interest rates.

Stress testing has become a significant barrier for landlords in recent years. Higher interest rates have limited borrowing capacity and made deals more difficult to complete. Redwood’s reductions across variable, two- and three-year fixed rates are intended to ease these pressures, improve affordability, and support more mortgage cases reaching completion.

The update applies to Redwood’s full range of residential BTL and commercial mortgage products, with affordability calculations now reflecting the reduced stress rates.

The bank expects the change to support brokers in placing more variable, two- and three-year fixed rate deals, which have been particularly constrained in recent months.

In addition, the specialist business bank has introduced a new tiered pricing structure as part of ongoing enhancements to its mortgage offerings.

Tom Worbey, senior lending product manager at Redwood Bank, said, “Brokers tell us one of their biggest frustrations is stress rates. By lowering our residential BTL and commercial mortgage stress rates, we’re giving brokers more options and helping landlords achieve the leverage they need. Affordability is at the forefront of the current market. Landlords are navigating higher costs and tighter yields, and brokers are working harder than ever to structure viable deals.”