Leeds Building Society has reduced its stress rate on buy-to-let (BTL) fixed rate deals for five years or more.

The stress rate has been reduced from 5.5% to 4.5% for BTL purchases or remortgages with additional borrowing on longer-term fixed-rate mortgages.

Leeds Building Society mortgage distribution director Martese Carton says: “Reducing our stress rate for longer-term fixed rate products gives the applicant greater borrowing power with an added opportunity to capital raise to improve their properties’ energy efficiency.”

While Leeds Building Society has cut its stress rate, other lenders including Santander have increased their stress rate for BTL lending.

Santander increased its 145% at 4% on a five-year fixed to 150% at 4.25%, which means for a rental income of £1,000, the maximum loan would reduce from circa £206k to £188k.

Similarly, Metro increased its stress rate from 140% at 3.5% to 140% at 4%, a reduction from circa £244k to £214k on the same £1,000 monthly rental income for a landlord.

Metro falls under a similar line of specialist lending as Molo Finance, who last week announced the temporary suspension of its BLT product range due to funding.

A message on its website stated the changes were due to both “spiking inflation” and the recent interest rate rises carried out by the Bank of England, which further increased to 1% today.

Commenting on the trend, Private Finance technical director Chris Sykes says: “There may be some association here with Metro trying to not get inundated with applications now no longer proceeding with Molo.”

Sykes explains: “This change potentially indicates lenders are worried about the BTL market and long-term rental voids moving forward and looking to mitigate risk in this area amid tenants facing rising rentals costs, the average cost of rent for property in England rising by 0.5% to £1,012 in April, combined with soaring inflation and a cost-of-living crisis.”