Santander for Intermediaries says it will cut all its residential and most buy-to-let affordability rates from tomorrow (14 December).
The unit told brokers in a note: “This means that most of your clients will be able to borrow more than before, while also ensuring we meet our obligations as a responsible lender.”
“Our affordability and BTL calculators will be updated to reflect these changes. So please use these calculators on our website to make sure you get an accurate reflection of what we can lend your clients.”
The lender says its usual pipeline rules will apply, meaning that all full mortgage applications already submitted on its Introducer Internet system by 10pm on 13 December won’t be affected by the changes.
It adds that full mortgage applications submitted from 6am on 14 December, or where a material change is made to a full mortgage application submitted before 10pm on 13 December, will be assessed using is updated lending policy.
The move comes after chancellor Jeremy Hunt calmed international debt markets in October, by largely reversing former chancellor Kwasi Kwarteng’s tax-cutting mini-budget on 23 September, which saw the number of products on the market fall sharply while remaining loan prices jumped. Hunt went on to consolidate his measures in the Autumn Statement last month.
Also, on 3 November, the Bank of England increased the base rate by 75bps to 3%, the biggest since 1989 and the eighth time in a row it has lifted rates. Last year in November the base rate was 0.1%.
Houz Mortgages director Benjamin Blyth says: “Although they’ve announced positive changes, Santander has not given much away about what exactly has improved.
“Could they be one of the first lenders to remove the stress-testing element of mortgage affordability? Those with a very good memory will recall at the start of 2022 that ‘mortgage borrowing would get easier’ because of the removal of this rule by the Financial Conduct Authority.
“Prudently, not many lenders actually changed their policy on it because it’s simply a good test to ensure borrowers can afford their payments if rates increase. And we all know what happened next.
“Elsewhere, lenders have amended their affordability assessments to account for higher living costs and household outgoings, in line with Office for National Statistics figures. This has made affordability slightly tougher so it’s great to see Santander combat it with a more generous approach.”
Riverside Mortgages owner and mortgage broker Lewis Shaw adds: “This move by Santander is welcome news. However, this does not mean they’ll be sat at the top of the rate tables; they’ll simply be back in the mix.
“Santander has been so far down the rate lists for weeks they must now be in a position to get some new business in, and the easiest way for them to do that is to price their rates so they become competitive once more.
“However, do not confuse this with a rate war, it’s simply to bring themselves in line with the rest of the market. Nothing more, nothing less.”
