Accord Mortgages has reduced interest coverage ratio rates (ICRRs) used in its affordability assessments for landlords.
The lender has made the move to ease affordability pressures on landlords.
For landlords remortgaging on a like-for-like basis, the ICRR on products with terms of five years or more will be 4.75% or product rate plus 0.35%.
The ICRR will reduce to 4.75% or product rate plus 0.7% for products with initial terms under five years. In either case, whichever rate is higher will apply.
Where landlords are purchasing a property or remortgaging with capital-raising, the ICRR will be 4.75% or product rate plus 0.50% for product terms of five years or more.
For product terms of less than five years, the ICRR will be 5.5% (unchanged) or product rate plus 2%. In both cases, the rate to apply will be whichever is higher.
Accord’s ICR is unchanged at 125% for all basic-rate taxpayers and 145% for all higher rate taxpayers.
“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,” said Nicola Alvarez, head of strategic partnerships and propositions at Accord Mortgages.
“The PRS 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.”
