Platform, the intermediary arm of the Co-operative Bank, is the latest lender to revise the interest coverage and stress rates that it uses in buy to let applications.
In response to the PRA Consultation Paper 11/16 that was published in March this year, Platform hopes to reflect its ongoing commitment to responsible lending by implementing the following changes.
As from Monday 26th September its interest coverage ratio will increase to 145% and a stress rate of 5.5% will be applied to all buy to let applications.
The change will not apply to pipeline applications, but in order for an application to fall into the pipeline category a decision in principle (DIP) must be completed and an application submitted and converted by the 23rd September.
Any DIPs not converted before the 23rd September will not meet the new controls and the application will therefore be assessed using the new criteria.
Platform’s buy to let mortgages are only available to applicants borrowing personally. It does not offer products to limited companies which, so far, are not affected by stricter debt cover ratios. Limited company rental calculations are still c.125% at 5%.
David Whittaker, Managing Director, Mortgages for Business, said:
"Tightening affordability was proposed to prevent inappropriate lending and the potential for excessive credit losses. Some lenders have already moved their stress tests for individual borrowers including The Mortgage Works, which was the first to break cover, our own lending brand Keystone, also The Woolwich (Barclays) and Foundation Home Loans.
“Now Platform joins the fray but there are many other lenders that are yet to make the adjustment and it is likely that the PRA will insist that they do before the year’s end. I certainly wouldn’t want to be the last lender standing fast in this regard."
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20th September 2016