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Natwest lowers stress test rates in "big boost for landlords"

Journalist: Riz Malik

ended 25. January 2024

NatWest has today announced it is cutting its buy-to-let stress test rates:

  • For 2-year fixed rates, a reduction from 7.81% to 7.33%.
  • For 5-year fixed rates, a drop from 6.68% to 5.95%.
  • For like-for-like remortgages, a decrease from 7.15% to 6.27%.

Newspage asked brokers why NatWest may have made these adjustments, how these lowered rates might benefit landlords and whether they expect this trend to catch on with other lenders. Their views can be found below.

7 responses from the Newspage community

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Akhil Mair
Director at Our Mortgage Broker
This a massive win for landlords who have suffered setback after setback of late. NatWest's decision to slash buy-to-let stress test rates, particularly on their 2-year and 5-year products, is a strategic move to attract more business from this segment of the market and stay competitive. Lowered stress test rates will not only benefit landlords, by easing their financial burden, but also support tenants indirectly. The big question now is whether this trend will ripple across the wider lending community. We are cautiously confident that other lenders might follow suit, recognising the need to stay agile in a dynamic market. NatWest's move could be the catalyst for a positive shift in the industry, benefitting both lenders and landlords alike.
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Riz Malik
Independent Financial Adviser at R3 Wealth
This is a big boost for landlords who can now benefit from improving market conditions resulting in greater loans. If landlords benefit, maybe their tenants, who could be tomorrow's first-time buyers, will benefit as well.
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Darryl Dhoffer
Founder at The Mortgage Geezer
NatWest cutting buy-to-let stress rates really does put them in the mix now with the leading players. You could argue they are a bit late to the buy-to-let party, but any reductions can only benefit landlords who have been under the cosh for quite some time.
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Ben Perks
Managing Director at Orchard Financial Advisers
This is a great example of how a lender can show a real appetite for lending without competing solely on rate. In the buy-to-let space affordability has been the biggest challenge over the past 12 months as rate rises have forced lenders to harshen their stress tests. The relaxing of these stress tests is a welcome change and will benefit many borrowers that are struggling to afford, on paper, the mortgages they already have. The better the mortgage options for landlords, the less they need to raise rents. This is a really positive move by NatWest.
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Michelle Lawson
Director at Lawson Financial
This is a step in the right direction for landlords who have been repeatedly bludgeoned for many years now and will help them to borrow more than before under the previous rental assessments. The rental sector is pivotal to housing supply so any changes that have a positive effect should be applauded.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
This is a positive step in the right direction for buy-to-let affordability models, especially from a large lender like NatWest. The reduced stress rate is a good indication that lenders view the recent inflationary rise as a mere blip in the long term road of reductions. It would be good to see further lenders follow suit as andlords have had so many of their motivations for running a portfolio eroded in recent years.
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Austyn Johnson
Founder at Mortgages For Actors
Welcome tweaks but nothing amazing or market-leading. If NatWest want more business, they need to think about making that drop again. The specialist buy-to-let lenders are 5%-6% stress testing, which would essentially write NatWest out.