"Refining our affordability criteria allows us to support brokers in helping their landlord clients to navigate a challenging landscape, without compromising their long-term sustainability"
- Nicola Alvarez - Accord Mortgages
Accord Mortgages is taking steps to support landlords by reducing Interest Coverage Ratio Rates (ICRRs), easing affordability pressures and helping maintain the supply of private rental housing.
Rising interest rates in recent years have made it increasingly challenging for landlords to meet affordability criteria. Now that rates have stabilised, the intermediary-only lender is adjusting ICRRs used in its assessments to help brokers support more landlord clients in securing finance while ensuring they can manage repayments if rates rise again.
The changes are as follows:
Remortgaging on a like-for-like basis:
Products with a term of five years or more: ICRR reduced to 4.75% or product rate plus 0.35% (previously product rate plus 1%), whichever is higher.
Products with a term of less than five years: ICRR reduced to 4.75% (previously 5.5%) or product rate plus 0.70% (previously product rate plus 1%), whichever is higher.
Purchasing a property or remortgaging with capital-raising:
Products with a term of five years or more: ICRR set at 4.75% or product rate plus 0.50% (previously product rate plus 1%), whichever is higher.
Products with a term of less than five years: ICRR remains 5.5% or product rate plus 2%, whichever is higher.
The lender’s interest coverage ratio (ICR) remains unchanged at 125% for basic-rate taxpayers and 145% for higher-rate taxpayers.
“We recognise the increasing pressures landlords are facing, and as a buy-to-let lender, we’re committed to adapting our approach to help them access the finance they need," comments Nicola Alvarez, head of strategic partnerships and propositions at Accord Mortgages (pictured). "Refining our affordability criteria allows us to support brokers in helping their landlord clients to navigate a challenging landscape, without compromising their long-term sustainability."
Alvarez added, “The private rental sector is crucial to the functioning of a healthy housing market and economy, therefore it’s so important that we, as an industry, continue to look for opportunities to support them and help to maintain the availability of quality rental homes across the UK.”
