NatWest's increase in its buy-to-let stress rates is a "blow to landlords", according to brokers.
NatWest announced that, starting from yesterday (July 25), it had changed buy-to-let stress rates within its decision in principle and full mortgage application.
These changes included increasing two year fixed stress rates from 8.1 to 8.6 per cent, increasing five year fixed stress rates from 6.89 per cent to 7 per cent, and increasing like for like remortgage rates from 7.54 per cent to 8.21 per cent.
Switch Mortgage Finance director, Elliott Culley said this represented a "further blow to landlords, who are already getting battered by a tough market at the moment."
He added: “With swap rates currently reducing and some other buy-to-let focused lenders reducing mortgage rates, it seems wholly out of step with the rest of the market.”
This sentiment was shared by Yellow Brick Mortgages managing director, Stephen Perkins, who said: “NatWest putting up stress-test rates and reducing borrowing potential on the same day that other major banks are reducing their residential rates appears unjustified."
Dimora Mortgages director, Jamie Lennox, pointed out that this was the second increase to the stress testing in as many months and that, as a result, it "feels" as if NatWest lacks appetite "to take on new buy-to-let businesses on their books".
Lennox argued that other lenders will "certainly" pick up the slack left behind if NatWest stopped looking for new businesses, but if other lenders were to follow suit it could force more landlords to sell up due to a lack of refinance options.
This idea was echoed by The Mortgage Masters founder, Laura Bairstow, who warned: “Further increasing the stress rates will make it even more difficult for landlords to remortgage."
She said it will mean that many landlords will be forced to sell and additionally pointed out that "it isn't just the private landlords who will suffer here, as others will be forced to increase rents for tenants."
Bairstow cautioned that the increased rent will make it harder to get on the property ladder, especially in the context of increased cost of living.
"Let's just hope this is NatWest's way of saying they no longer want a hand in the buy-to-let market and other lenders don't follow suit," she concluded.
Also announcing a change in rates, Coventry Building Society detailed that it will be closing products on July 27, with new products to be launched at 8am on July 28.
These new products will make changes to the building society's but-to-let products, reducing all two and five year fixed buy-to-let and portfolio landlord buy-to-let rates, and increasing buy-to-let flexx fixed existing customer product transfer only rates.
Changes were also announced to Coventry's residential mortgage products, including reducing all two and five year fixed new business rates, and increasing flexx fixed existing customer product transfer only rates.
tom.dunstan@ft.com
