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NatWest buy-to-let stress rates

ended 13. June 2023

This morning, NatWest announced: "Effective Tuesday 13th June, we’re changing our Buy to Let stress rates as follows within our Decision in Principle (DIP) and Full Mortgage Application (FMA):

  • 2 year fixed: Increase stress rate from 6.7% to 8.10%
  • 5 year fixed: Increase stress rate from 6% to 6.89%
  • Like for like remortgage: Increase stress rate from 6% to 7.54%

UK newswire, Newspage sought the views of brokers, below.

8 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
This is not a surprise however sometimes it is better to withdraw from the market completely rather than make it almost impossible for someone to meet criteria. The reality here is that for a £100k interest-only buy-to-let mortgage now with Natwest, the rental would need to be a minimum of £843.75 per month on a 2yr for a basic/low rate tax payer or £987.78 for a high rate tax payer and on a 5yr fixed rate £717.70 for a low/basic rate tax payer and £832.54 for a higher rate tax payer. They are a bit kinder on like-for-like remortgages, however rental would need to be £785.41 for a low/basic rate tax payer and £848.25 for a higher rate based on £100k of borrowing. This is also why rents are constantly increasing and many landlords are starting to exit and sell up as landlords are being pressed by the lenders/markets as an unintended consequence as well as much heavier regulation and other costs. As always, it will work for some but not everyone.
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Riz Malik
Independent Financial Adviser at R3 Wealth
I do not see Natwest's share of the buy-to-let market increasing at these stress test levels. However, I am not sure how much of a buy-to-let market will be left if things continue at this rate.
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Craig Fish
Director at Lodestone Mortgages
NatWest, why don't you just make a formal announcement that you no longer offer buy-to-let mortgages? It seems that with many recent criteria and stress test changes, the usual 'high street' residential lenders are gradually pulling from the buy-to-let market. Pretty soon it's going to feel like we have gone back 15 years in time, where buy-to-let lending was only left to a few specialist lenders.
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Graham Cox
Director at Bridging Hub
This is a huge hike in Natwest's stress test rates for buy-to-let mortgage applications. Clearly, it's a pre-emptive strike ahead of expected further increases in interest and mortgage rates. Fortunately, there are other lenders with far less onerous stress tests, well below 6%, though that could change at any time given the current market volatility.
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Jamie Lennox
Director at Dimora Mortgages
These changes show very clearly that NatWest has a minimal appetite for the buy-to-let mortgage market at present. With higher stress testing, it will rule out a large number of landlords being able to access them as a lender. The question is, will there be other lenders who follow in their footsteps? If they do, we will see a mass sell-off from landlords who are struggling to obtain new mortgage deals.
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Gareth Davies
Director at South Coast Mortgage Services
It would be much better to tell us all that they simply aren't interested in buy-to-let right now.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It's increasingly apparent that NatWest has effectively curtailed its support for the buy-to-let sector, indicating a shift in focus towards its residential offerings. It also appears that the bank aims to ensure that service standards remain unaffected in the future.
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Amit Patel
Adviser at Trinity Finance
Clearly with this announcement NatWest are kindly saying they do not have the appetite to lend on buy-to-let mortgages in the current climate. Whether other high street lenders make a similar move in the coming days is the million dollar question.