Accord Mortgages is making further positive strides to support landlords today, with changes designed to ease their affordability pressures and help maintain the supply of vital private rental housing.
Over recent years, rising interest rates have made it increasingly challenging for landlords to meet affordability criteria. Now that rates have stabilised, the intermediary-only lender is reducing the Interest Coverage Ratio Rates (ICRRs) used in its affordability assessments.
This move is aimed at helping brokers to support more landlord clients to secure finance, while still ensuring they can comfortably manage their repayments should rates rise again.
The changes mean that:
Where landlords are remortgaging on a like-for-like basis:
- For products with a term of five years or more, the ICRR will be 4.75% or product rate plus 0.35% (was product rate plus 1%) - whichever is higher
- For products with an initial term of less than five years, the ICRR will reduce to 4.75% (was 5.5%), or product rate plus 0.70% (was product rate plus 1%) - whichever is higher.
Where landlords are purchasing a property or remortgaging with capital-raising:
- For product terms of five years or more, the ICRR will be 4.75% or product rate plus 0.50% (was product rate plus 1%) - whichever is higher
- For product terms of less than five years, the ICRR will be 5.5% (unchanged) or product rate plus 2% - whichever is higher.
The lender’s interest coverage ratio (ICR) is unchanged at 125% for all basic-rate taxpayers and 145% for all higher rate taxpayers.
Nicola Alvarez, head of strategic partnerships and propositions at Accord Mortgages, said: “We recognise the increasing pressures landlords are facing, and as a buy-to-let lender, we’re committed to adapting our approach to help them access the finance they need.
“Refining our affordability criteria allows us to support brokers in helping their landlord clients to navigate a challenging landscape, without compromising their long-term sustainability.
“The private rental sector is crucial to the functioning of a healthy housing market and economy, therefore it’s so important that we, as an industry, continue to look for opportunities to support them and help to maintain the availability of quality rental homes across the UK.”
