Barclays has introduced a new “dynamic” stress testing process for buy-to-let, which is based on customers’ actual product rate and should allow many to borrow more.
In an update to brokers, Barclays says the new stress rate will be calculated as a fixed margin above the chosen product rate, with a minimum floor.
It says: “Linking the stress rate to the chosen product rate means our affordability assessments better reflect your customers’ circumstances, while maintaining a consistent stress margin to support responsible lending.
“In many cases, this change will increase the maximum loan amount available, compared to our current estimate.”
The lender has also updated its interest coverage ratio (ICR) and ongoing charges assumptions in line with the change.
Barclays says agents can use the affordability calculator to make an indicative assessment.
It says: “Please ensure that the interest rate entered into the tool reflects the expected product as closely as possible as this may affect the outcome.”
Pipeline requests submitted before today will not be affected.