Virgin Money has announced changes to its buy-to-let lending policy.

As well as improving its stress rate calculations for both portfolio and non-portfolio landlords, the lender has also lowered its interest cover ratio (ICR) to 125% for basic rate taxpayers.

For remortgaging with no additional borrowing, stress rates will now be calculated at the higher of 5% or pay rate +1%.

For purchase or remortgage with additional borrowing, fixed rates below five years or variable rate mortgages will now be calculated at 5.5% or pay rate +2%.

Meanwhile, five-year plus fixed rates will be calculated at 4.5% or pay rate +1%.

Virgin’s two-year fixed rate products currently start at 5.76% and five-year products from 5.32%, so its stress rates now start from 6.76% and 6.32% respectively.

Virgin Money’s head of secured lending, Craig Calder, says: “A vibrant rental sector plays a key role in the wider mortgage environment and as such we have made changes to our Virgin Money buy-to-let mortgage lending policy.

“We continue to evolve our mortgage policy and these changes ensure that we are supporting landlords through an improved affordability assessment.”