Saffron Building Society has cut the stress rate levelled on residential borrowers from 3% to 2%.

The change takes place with immediate effect.

This move comes after the Bank of England said that, from August this year, it would drop its requirement for lenders to apply the stress test when assessing mortgage affordability.

The test was introduced by the Financial Policy Committee in 2014 as a way of limiting an increase in household debt through looser mortgage underwriting standards.

Saffron head of business development Tony Hall says: “It is all about realism. As a society we pride ourselves on our manual underwriting and common sense approach to lending. This is just another example of that.

“By keeping the 3% stress rate there is a real possibility that many who would be great mortgage customers will be knocked out in the first round.

“The 1% drop will make a big difference for some applicants whilst backed up by our expert underwriters will ensure we remain responsible in our lending, providing confidence for both brokers and their clients.”