Loan sizes offered to buy-to-let borrowers have plummeted in the last six months.
Rising rates have pushed up stress tests and negated the benefit of stressing rental income at pay rate, which was previously available from some lenders.
This is according to data analysis by, broker research platform, Mortgage Broker Tools (MBT), which compared the loan sizes available based on typical calculations for three different tiers of rental payments.
The following table show falling buy-to-let loan sizes:
| Six months ago: Standard calculation | Six months ago: Based on pay rate | Typical calculation today |
| 125% @ 5.50% | 125% @ 3.69% | 125% @ 6.79% |
£750 pcm rent | £131,000 | £195,000 | £106,000 |
£1250 pcm rent | £218,000 | £325,000 | £177,000 |
£1750 pcm rent | £305,000 | £455,000 | £247,000 |
Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “It’s no surprise that the loan sizes available to buy-to-let investors have fallen in recent months as rate rises have significantly impacted stress tests. However, our data analysis has revealed the scale of change, particularly as the benefits of stressing rental income at the pay rate of the mortgage have now been eclipsed but the size of the rate increases.
“In the current environment, many landlords may be tempted to take uncompetitive product transfer rates offered by their lenders at the end of their existing deal, so it’s vital that brokers have access to a research platform that enables them to quickly and easily assess the options available to their clients, to prevent them from making a potentially expensive mistake.
“MBT Affordability is the most comprehensive platform in the market, providing brokers with accurate calculations of how much their clients can borrow from a panel of more than 40 Residential and nearly 70 buy-to-let lenders, based on affordability and criteria. Results from all lenders are delivered in under a minute, with no approximations or estimates.”
