Barclays has introduced a new “dynamic” stress testing process for buy-to-let, which is based on customers’ actual product rate and should allow many to borrow more.
In an update to brokers, Barclays says the new stress rate will be calculated as a fixed margin above the chosen product rate subject to a minimum floor.
It says: “Linking the stress rate to the chosen product rate means our affordability assessments more closely reflect your clients’ circumstances, while maintaining a consistent stress margin to support responsible lending.
“In many cases, this change will increase the maximum loan amount available, when compared with our current assessment.”
The lender has also updated its interest coverage ratio (ICR) and running cost assumptions in accordance with the change.
Barclays says brokers can use its affordability calculator to make an indicative assessment.
It says: “Please ensure the interest rate entered in the tool reflects the expected product as closely as possible, as this may impact the outcome.”
Pipeline applications submitted before today will not be impacted.
