In a move that is set to benefit landlords and property investors across the UK, NatWest has recently unveiled some reductions in their Buy-to-Let stress rate tests. The adjustments, which come into effect immediately, reflect NatWest’s commitment to supporting the property market and providing more favourable conditions for those looking to invest in rental properties. What does this mean exactly? Mortgage lenders offering a buy-to-let mortgage will test the loan and the borrower at a certain payment rate, to make sure that they can afford the loan, if rates should increase significantly in the future. Here are the new details for NatWest buy-to-let stress rate changes.
New NatWest Buy-To-Let Stress Rate
- 2-Year Fixed: The stress rate for 2-year fixed Buy-to-Let mortgages has been decreased from 8.6% to 8.15%. This reduction is poised to provide a more lenient affordability assessment for landlords seeking shorter-term mortgage options.
- 5-Year Fixed: For those opting for a longer-term commitment, NatWest has lowered the stress rate for 5-year fixed Buy-to-Let mortgages from 7% to 6.78%. This adjustment is more significant that the 2-year fixed reduction, and acknowledges the stability that longer-term investments often bring.
- Like-for-Like Remortgages: Investors looking to refinance their existing rental properties will benefit from a lowered stress rate of 7.55%, down from the previous 8.21%. This reduction is expected to facilitate smoother remortgage processes for those who are not expanding their property portfolios but are seeking better financial terms and deals.
Why Are Stress Rate Tests Reducing?
The decision to reduce these stress rate tests is most likely a response to the evolving landscape of the property market and specifically the struggles that buy-to-let landlords have been having in the last few months. With the aim of making property investment more accessible and more profitable ultimately. As mortgage experts, we at Oportfolio welcome this move by NatWest. We hope that moves like this and other moves by buy-to-let lenders in the future should stimulate activity in the Buy-to-Let market. Lower stress rate tests can translate into improved affordability for borrowers, potentially opening doors for more individuals to invest in rental properties and make more of a profit if you already own a buy-to-let. These adjustments may also trigger a ripple effect, prompting other mortgage lenders to potentially revaluate their own stress rate policies and take a different approach than they have been recently.
Speak To a Mortgage Expert
While these reductions are undoubtedly good news for property investors, potential borrowers still need to remain cautious and consider their financial situations thoroughly before committing to any mortgage. Despite more lenient stress rate tests, it’s crucial for borrowers to conduct comprehensive financial planning and consider the potential risks associated with property investment. That’s where we come in. As expert buy-to-let mortgage brokers, we know the market inside and out and we know all of the criteria updates exactly when they happen. Call or drop us a message today to see how we can help you to finance your buy-to-let property.