Accord Mortgages takes a significant step to aid landlords by reducing interest coverage ratio rates.
- Landlords previously facing affordability pressures can now access lower stress rates from Accord Mortgages.
- The intermediary-only lender’s changes are effective immediately, offering relief amid challenging market conditions.
- For properties with a loan term of five years or more, the interest coverage ratio rate decreases to 4.75%.
- Maintaining a crucial role, the private rental sector receives much-needed support through these adjustments.
Accord Mortgages has unveiled a series of strategic changes aimed at easing the financial burdens landlords face by decreasing its interest coverage ratio rates (ICRR). These adjustments are intended to provide support to landlords who are contending with affordability challenges while continuing to supply essential private rental housing.
Effective immediately, landlords remortgaging on a like-for-like basis will see the ICRR drop from 6.0% to 5.5%, or to the product rate plus 1%, depending on which is higher, for mortgages with an initial term of under five years. For those with terms extending to five years or more, the ICRR rate will now stand at 4.75%.
Additionally, landlords purchasing new property or seeking remortgaging with capital-raising can benefit from a lowered ICRR, reduced to 5.5% from a previous 6.5%, or the product rate plus 2% for terms under five years. For longer terms, this rate reduces from 5.5% to 4.75%, or the product rate plus 1%, whichever presents a higher charge.
Despite these alterations, Accord will maintain its interest coverage ratio at 125% for basic rate taxpayers and 145% for those on a higher rate. Nicola Alvarez, the senior manager for new propositions at Accord Mortgages, highlighted the challenging circumstances landlords have been navigating, showing the lender’s commitment to aiding the private rental sector.
Alvarez stated, “Things have been extremely challenging for landlords in recent times, so, as a buy-to-let lender, we’re constantly reviewing our offering to find new ways to help them as much as we possibly can.” This approach underscores the importance of the private rental sector in sustaining economic stability.
The recent adjustments by Accord Mortgages provide landlords with necessary relief amidst ongoing financial strains, reinforcing the vitality of the private rental market.
