The Mortgage Works (TMW), one of the UK’s largest buy-to-let lenders, has today reduced its affordability stress rate for certain buy-to-let mortgage applications—offering landlords a better shot at borrowing more in a tightening market.
The lender has announced a 0.50% reduction in its affordability stress rate for new applications up to 65% loan-to-value (LTV), targeting five-year fixed terms and like-for-like remortgages. The revised stress rate now sits at 4.00% or the product pay rate—whichever is higher.
These changes take effect immediately and apply to a wide range of borrower types including buy-to-let, let-to-buy, large portfolio, and HMO applications.
Supporting landlord cash flow at a crucial time
Damian Thompson, Director of Landlord at The Mortgage Works, commented: “These positive changes to our stress rates will serve to boost affordability. They will enable landlords to borrow more with us but, at the same, will ensure that we continue to lend responsibly.”
This comes as a welcome development for many landlords who have struggled to refinance or expand portfolios under current affordability rules. High interest rates over the last 18 months have made it increasingly difficult for property investors to meet lender stress tests, even as rents continue to rise.
Landlords now able to borrow more per pound of rental income
Jeni Browne, Business Development Director at Mortgage Finance Brokers, applauded the move, saying: “So many landlords have been unable to remortgage or acquire new properties because of the more onerous rental calculations that have been in play on the back of higher interest rates – this has been at a huge cost to the Private Rental Sector.”
She added: “Seeing the UK’s largest Buy to Let lender tackle this head on by reducing their rental calculations thus allowing landlords to borrow more per pound of rental income, will mean that property investors will be able to remortgage thus accessing better buy to let mortgage rates, and get investing once more.”
The revised rules apply as follows:
- Like-for-like remortgage (all fixed terms): 4.00% or pay rate if LTV is 65% or less; 4.50% or pay rate if higher.
- Five-year fixed for purchase or capital raise: Same 4.00% or pay rate for ≤65% LTV, 4.50% if over.
- Shorter fixes (1–2 years) or further advances: Continue to be stress-tested at 5.50% or pay rate +2.00%.
- Limited company BTL applications: No change to current stress rate policy.
Landlord appetite may return as lending criteria loosen
The timing of this stress rate cut could spark fresh momentum in a slowing buy-to-let sector, particularly as more landlords explore refinancing options or look to re-enter the investment market.
With affordability easing slightly and long-term fixes still attractive in the current economic climate, the move by TMW might encourage other lenders to follow suit. After all, as sentiment begins to improve, landlord investors will need products that match their ambitions.
