The Mortgage Works (TMW) has announced it is reducing its stress tests for lower rate tax payers and updating its stress rate policy for its further advance applications.

Stress Rates will now be linked to the ICR applied to the application, the firm stated.

For further advance, TMW said that individual loan elements will continue to be stressed separately, but added that the stress rate applied to existing lending will also be set to a minimum of the stress rate applicable to the new borrowing.

Reacting to the move by TMW, Lodestone Mortgages & Protection founder and director, Craig Fish, said: “This is much needed and long overdue news. Interest rate expectations have reduced significantly since the mini-Budget mortgage market massacre, but lenders have been very slow to react.

“Perhaps now there might be some normality returning to the buy-to-let (BTL) market, though there is still a long way to go yet. Once one lender makes a move, others tend to follow, so our fingers are crossed, as will be those of landlords up and down the country.”

Managing director at EHF Mortgages, Justin Moy, added: “Improvement to the stress test for BTL mortgages is very welcome from TMW, and hopefully will encourage other lenders to follow. The stress test will boost the amount landlords can borrow based on the expected rental income, so a combination of lower rates, and a better ICR can only be applauded.

“There are still a number of specialist lenders struggling with rates of 6+%, specifically those that are great supporters of portfolio landlords. Hoping to see some positive news for the professionals shortly.”

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