The Mortgage Works (TMW) will reduce it stress test rates for lower rate taxpayers on Wednesday 7 December.

This will bring the tests in line with what TMW currently offers limited companies at a 125% interest cover ratio.

On a one- or two-year fix for purchase, remortgage and further advance, TMW will now test for the higher of the pay rate plus 2% or 5.50%.

For a like-for-like remortgage, the stress rate is the higher of the pay rate plus 0.50% or 5.50%, for a five- or 10-year fix, the pay rate plus 0.50% is tested for and, for trackers and variables, the calculation is the higher of the pay rate plus 2.75% or 5.50%.

For further advance applicants, the stress rate for existing lending will be based on the minimum of the stress rate applicable to new lending.

Mint FS director Matthew Jackson comments: “With the current market offering nothing but challenges to landlords and in particular portfolio landlords who are struggling with stress tests even for remortgages, this is a significant move from TMW to reassess their stance.

“As a rule, where Nationwide and TMW go other lenders follow, and a relaxation of the assessment criteria for buy-to-let mortgages is much needed at the moment. Though this has started with lower tax rate payers only, hopefully this is a sign of things to come and other lenders get creative with solutions for this area of the market.”