Anger as buy to let stress tests make borrowing almost impossible

There’s been widespread anger from the mortgage broker community in response to NatWest’s decision to make buy to let stress tests much tougher for borrowers.

A statement yesterday morning read: "Effective Tuesday 13th June, we’re changing our Buy to Let stress rates as follows within our Decision in Principle (DIP) and Full Mortgage Application (FMA).”

In details this means that for a two-year fixed rate morning the stress rate was increased from 6.7 per cent to 8.10 per cent. For a five year fixed the rate went from 6.0 per cent to 6.89 per cent. The like-for-like remortgage stress rate has now gone from 6.0 per cent to 7.54 per cent.

In response Jamie Lennox, a director at Dimora Mortgages, says: “These changes show very clearly that NatWest has a minimal appetite for the buy to let mortgage market at present. With higher stress testing, it will rule out a large number of landlords being able to access them as a lender. The question is, will there be other lenders who follow in their footsteps? If they do, we will see a mass sell-off from landlords who are struggling to obtain new mortgage deals.”

Riz Malik of R3 Mortgages adds: “I do not see Natwest's share of the buy-to-let market increasing at these stress test levels. However, I am not sure how much of a buy to let market will be left if things continue at this rate.”

Graham Cox of SelfEmployedMortgageHub believes this move is a pre-emptive strike ahead of an expected further Bank of England base rate rise. He comments: “Fortunately, there are other lenders with far less onerous stress tests, well below 6.0 per cent, though that could change at any time given the current market volatility.”

Anil Mistry, a mortgage broker at RNR Mortgage Solutions, states: “It's increasingly apparent that NatWest has effectively curtailed its support for the buy to let sector, indicating a shift in focus towards its residential offerings. It also appears that the bank aims to ensure that service standards remain unaffected in the future.”

And a final comment, from Gareth Davies of South Coast Mortgage Services, puts it this way: “It would be much better to tell us all that they simply aren't interested in buy to let right now.”

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