Accord Mortgages has announced changes to its affordability assessments for buy-to-let landlords, aimed at easing affordability pressures and maintaining the supply of rental housing across the UK.
The intermediary-only lender has reduced the Interest Coverage Ratio Rates (ICRRs) used in its affordability calculations, following a period of stabilisation in interest rates.
For landlords remortgaging on a like-for-like basis, products with a term of five years or more will now be assessed using an ICRR of 4.75% or product rate plus 0.35%, whichever is higher, down from product rate plus 1%.
For products with an initial term of less than five years, the ICRR will reduce to 4.75%, or product rate plus 0.70%, down from 5.5% or product rate plus 1%.
For those purchasing a property or remortgaging with capital-raising, five-year terms will use an ICRR of 4.75% or product rate plus 0.50%, whichever is higher, reduced from product rate plus 1%.
For shorter terms of under five years, the ICRR remains at 5.5% or product rate plus 2%. The lender’s interest coverage ratio (ICR) remains unchanged at 125% for basic-rate taxpayers and 145% for 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.”
