This morning, NatWest announced: “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):
- 2 year fixed: Increase stress rate from 6.7% to 8.10%
- 5 year fixed: Increase stress rate from 6% to 6.89%
- Like for like remortgage: Increase stress rate from 6% to 7.54%“
UK newswire, Newspage sought the views of brokers, below:
Michelle Lawson, Director- Mortgage & Protection Adviser at Lawson Financial Ltd, said:
“This is not a surprise however sometimes it is better to withdraw from the market completely rather than make it almost impossible for someone to meet criteria. The reality here is that for a £100k interest-only buy-to-let mortgage now with Natwest, the rental would need to be a minimum of £843.75 per month on a 2yr for a basic/low rate tax payer or £987.78 for a high rate tax payer and on a 5yr fixed rate £717.70 for a low/basic rate tax payer and £832.54 for a higher rate tax payer.
“They are a bit kinder on like-for-like remortgages, however rental would need to be £785.41 for a low/basic rate tax payer and £848.25 for a higher rate based on £100k of borrowing. This is also why rents are constantly increasing and many landlords are starting to exit and sell up as landlords are being pressed by the lenders/markets as an unintended consequence as well as much heavier regulation and other costs. As always, it will work for some but not everyone.”
Jamie Lennox, Director at Dimora Mortgages, said:
“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, Founder & Director at R3 Mortgages, said:
“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.”
Craig Fish, Director at Lodestone Mortgages & Protection, said:
“NatWest, why don’t you just make a formal announcement that you no longer offer buy-to-let mortgages? It seems that with many recent criteria and stress test changes, the usual ‘high street’ residential lenders are gradually pulling from the buy-to-let market. Pretty soon it’s going to feel like we have gone back 15 years in time, where buy-to-let lending was only left to a few specialist lenders.“
Graham Cox, Founder at SelfEmployedMortgageHub.com, said:
“This is a huge hike in Natwest’s stress test rates for buy-to-let mortgage applications. Clearly, it’s a pre-emptive strike ahead of expected further increases in interest and mortgage rates. Fortunately, there are other lenders with far less onerous stress tests, well below 6%, though that could change at any time given the current market volatility.“
Gareth Davies, Director at South Coast Mortgage Services, said:
“It would be much better to tell us all that they simply aren’t interested in buy-to-let right now.”
Anil Mistry, Director and Mortgage Broker at RNR Mortgage Solutions, said:
“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.”
Amit Patel, Adviser at Trinity Finance, said:
“Clearly with this announcement, NatWest are kindly saying they do not have the appetite to lend on buy-to-let mortgages in the current climate. Whether other high street lenders make a similar move in the coming days is the million dollar question.”
