West One Loans’ buy-to-let arm has cut its fixed-rate mortgages by up to 70 basis points and eased stress tests for selected products.
The specialist lender says it has reduced its core and complex fixes by up to 70bps, with rates starting at 3.84% for two-year fixes and 4.64% for five-year fixes.
Its complex range covers large houses in multiple occupation and multi-unit blocks, holiday lets, expat mortgages, as well as first-time buyer and foreign national loans.
The firm’s portfolio two and five-year portfolio rates are down by up to 57bps and 54bps, respectively, and now start from 3.64% and 3.96%.
Its non-portfolio two and five-year fixes have been cut by 57bps and 58bps, respectively, and begin at 4.32% and 4.5%.
The business adds that from 5 January, the stress rate for any borrower opting for a variable rate or a fixed rate of less than five years will be the higher of 6% or pay rate, down from 6.5% previously.
This means on a typical £300,000 property with a 5% rental yield, a basic rate taxpayer, or limited company borrower, would be able to borrow £15,385 more than before the change.
West One Loans BTL managing director Andrew Ferguson says: “Landlords are becoming increasingly optimistic that rates are set to fall and so many of them are now looking to keep their options open by opting for a variable, or short-term, fixed-rate product.
“However, the thing that is stopping many of them from proceeding is that they are not able to borrow as much as they would if they opted for a five-year fixed rate or longer, due to the fact many lenders offer a set rate to calculate affordability.
“Our decision to lower our stress rates will give landlords the option to choose a variable or shorter-term fixed rate while still achieving the levels of leverage they need.
Ferguson adds: “The ability to choose a shorter-term rate gives landlords manoeuvrability and the option to switch into a longer-term fixed rate if and when mortgage rates fall further
“But, as a responsible lender, we won’t do anything that puts landlords at risk, which is why we now insist on a stress rate of the higher of 6% or pay rate. This is to ensure we continue to offer flexibility while lending responsibly.”
