West One Loans Buy-to-Let arm eases stress test requirments and slashes rates by up to 70 basis points

West One Loans bu-to-let arm slashed rates by up to 70 basis points and eased its stress test requirements for selected products as it positions itself for growth in 2024.

Since 5 January, the stress rate for any borrower opting for a variable rate or a fixed rate of less than five years will be the higher of 6% or pay rate, down from 6.5% before. 

This is a significant move and means that borrowers opting for a variable or a shorter-term fixed rate will be able to borrow much more than before. 

For example, on a typical £300,000 property with a 5% rental yield, a basic rate taxpayer or limited company borrower would be able to borrow £15,385 more than previously.

As well as reducing its stress test rate, the lender has also significantly sharpened up its rates. 

It has cut its portfolio two and five-year rates by up to 57bps and 54bps, respectively, meaning they now start from 3.64% and .96%.

Moreover, West One has slashed its non-portfolio two and five-year fixed rates by 57bps and 58bps, respectively, meaning they now start at 4.32% and 4.5%.

The lender has also cut its core and complex fixed rate products by up to 70 basis points, with rates now starting at 3.84% for two-year fixes and 4.64% for five-year fixes.

West One’s complex range includes large HMOs/MUBs, holiday lets, expat mortgages, as well as first-time buyer and foreign national loans.

Andrew Ferguson, Managing Director of Buy-to-let at West One Loans, says: “Landlords are becoming increasingly optimistic that rates are set to fall and so many of them are now looking to keep their options open by opting for a variable or short-term fixed rate product.

“However, the thing that is stopping many of them from proceeding is that they are not able to borrow as much as they would if they opted for a five-year fixed rate or longer, due to the fact many lenders offer a set rate to calculate affordability.

“Our decision to lower our stress rates will give landlords the option to choose a variable or shorter-term fixed rate while still achieving the levels of leverage they need.

“The ability to choose a shorter-term rate gives landlords manoeuvrability and the option to switch into a longer-term fixed rate if and when mortgage rates fall further.

“But, as a responsible lender, we won’t do anything that puts landlords at risk, which is why we now insist on a stress rate of the higher of 6% or pay rate. This is to ensure we continue to offer flexibility while lending responsibly.”

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