Accord Mortgages has cut the interest coverage ratio rates it applies to landlords by as much as 100 basis points.
The buy-to-let lender says when landlords are remortgaging on a like-for-like basis, the interest coverage ratio rate will drop to 6% (from 6.5%), or product rate plus 1% (whichever is higher), for products with an initial term of less than five years.
For products with a term of five years or more, the interest coverage ratio rate will be 5.5% (from 6.5%), or product rate plus 1% (whichever is higher).
It adds that when a landlord is buying a property or remortgaging with capital-raising, the interest coverage ratio rate will be 6.5% (from 7.5%) or product rate plus 2% (whichever is higher) for mortgages with a term of less than five years.
For product terms of five years or more, the interest coverage ratio rate will reduce to 5.5% (from 6.5%) or product rate plus 1% (whichever is higher).
The firm says these changes apply to all new applications.
It adds that its interest coverage ratio calculations remain at 125% for basic rate taxpayers and 145% for higher rate taxpayers.
Accord Mortgages senior manager for new propositions Nicola Alvarez says: “We understand the vital role landlords play in providing the kind of private rented housing which is in increasingly short supply, and are hoping these latest changes will provide much-needed support to them in the current challenging interest rate environment.”
