In a move that has sparked outrage among mortgage brokers, NatWest has implemented stricter stress tests for buy-to-let borrowers, drawing widespread criticism from the industry. The bank announced the changes yesterday, stating that they would come into effect on Tuesday, June 13, within their Decision in Principle (DIP) and Full Mortgage Application (FMA).
The alterations entail a significant increase in stress rates for various mortgage terms. For a two-year fixed rate, the stress rate has surged from 6.7% to 8.10%. Meanwhile, the stress rate for a five-year fixed rate has climbed from 6.0% to 6.89%. In the case of like-for-like remortgages, the stress rate has risen from 6.0% to 7.54%.
Expressing dismay over the changes, Jamie Lennox, a director at Dimora Mortgages, stated, “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 of R3 Mortgages shared a similar sentiment, expressing doubt about NatWest’s potential to expand its share of the buy-to-let market under these stress test levels. Malik remarked, “However, I am not sure how much of a buy-to-let market will be left if things continue at this rate.”
Graham Cox, representing SelfEmployedMortgageHub, believes that NatWest’s decision is a preemptive move ahead of an anticipated base rate increase by the Bank of England. Cox commented, “Fortunately, there are other lenders with far less onerous stress tests, well below 6.0%, though that could change at any time given the current market volatility.”
Anil Mistry, a mortgage broker at RNR Mortgage Solutions, opined that it is becoming increasingly evident that NatWest has significantly reduced its support for the buy-to-let sector, signaling a shift in focus towards its residential offerings. Mistry added, “It also appears that the bank aims to ensure that service standards remain unaffected in the future.”
Offering a final perspective, Gareth Davies of South Coast Mortgage Services bluntly stated, “It would be much better to tell us all that they simply aren’t interested in buy-to-let right now.”