Paragon Bank cuts buy-to-let rates by up to 0.70% and enhances criteria

Paragon Bank has reduced rates on five-year fixed-rate buy-to-let mortgages by up to 70bps, in addition to lowering its reference rate and making changes to minimum experience and maximum loan term criteria.

Rates on Paragon’s five-year fix with a 5% fee have been reduced from 5.20% to 4.50% for the purchase or remortgage of single self-contained properties. For energy efficient homes with EPC rating of A-C, the rate is 5bps lower at 4.45%, while the rate for HMOs and multi-unit blocks (MUBs) now starts at 4.70%.

Following a reduction in Paragon’s reference rate, from 5.50% to 5.00%, interest coverage ratios (ICR) are calculated in line with initial rates, except for sub-5% products whereby ICRs are calculated at 5.00%.

Paragon has also extended its maximum loan term from 25 to 35 years, while reducing the amount of experience buy-to-let landlords are required to have for HMO & MUB applications down from a minimum of three years to two.

Other rate cuts include a 55bps reduction, from 5.94% to 5.39%, on a five-year fixed-rate no fee product that comes with £750 cashback. Paragon’s EPC C and above loan is again 5bps lower at 5.34% and increases to 5.59% on HMOs and MUBs.

These products are available at up to 75% LTV for landlords applying through limited company structures or in personal name in England, Scotland and Wales.

Louisa Sedgwick, commercial director at Paragon Bank, said: “It’s great to get the year off to a positive start by taking up to 70bps off our 75% LTV five-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.”