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NatWest Increasing BTL Stress Tests

Journalist: Newspage News Desk

ended 25. July 2023

NatWest are increasing their BTL stress tests - see below.

Effective Tuesday, 25th July, 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 8.1% to 8.6%
  • 5 year fixed – increase stress rate from 6.89% to 7%
  • Like for Like Remortgage - increase from 7.54% to 8.21%

A few quick Q's…

What are the implications of this on your BLT clients who wish to purchase or need to remortgage?

Is this another nail in the coffin for new landlords, and how will this impact the rental sector?

Will other lenders follow suit, or are NatWest effectively saying they're closed for BTL business?

4 responses from the Newspage community

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Elliott Culley
Director at Switch Mortgage Finance
NatWest increasing their stress test tells me one thing, namely they don't want to lend in the buy-to-let market right now. It is a further blow to landlords, who are already getting battered by a tough market at the moment. With swap rates currently reducing and some other BTL-focused lenders reducing mortgage rates, it seems wholly out of step with the rest of the market.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The buy-to-let market is already struggling to provide the required levels of borrowing, leaving many existing landlords trapped with their current lender, or requiring larger deposits for new purchases. NatWest putting up stress-test rates and reducing borrowing potential on the same day that other major banks are reducing their residential rates appears unjustified.
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Laura Bairstow
Founder at The Mortgage Masters
Further increasing the stress rates will make it even more difficult for landlords to remortgage. Many will be forced to sell but it isn't just the private landlords who will suffer here, as others will be forced to increase rents for tenants. This, in turn, will make it even harder for people to get onto the property ladder as with increased rental payments and living costs in general, it's becoming more and more difficult for potential buyers to save the money for a deposit, even if the monthly mortgage payments are affordable. Let's just hope this is NatWest's way of saying they no longer want a hand in the buy-to-let market and other lenders don't follow suit.
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Jamie Lennox
Director at Dimora Mortgages
Given this is the second increase to the stress testing in as many months it feels like the doors are firmly closed at Natwest and lack any real appetite to take on new buy to let business on their books.

Other lenders will certainly pick up the slack left behind, the concern is if other lenders look to follow suit and turn that screw further it could force more landlords to sell up due to a lack of refinance options.