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Buy-to-let to avoid stress test “Armageddon”

Increases in buy-to-let lenders’ stress test levels should not be viewed as an ‘Armageddon moment’ for the sector, an industry expert has said.

David Whittaker, managing director of Mortgages for Business, said the maximum leverage available to borrowers was not being significantly impacted in historical terms.

He was speaking at Financial Services Expo (FSE) Manchester, the exhibition for the financial services industry in the North of England.


The Mortgage Works (TMW) recently raised its stress test level from 125% to 145%, but Whittaker said: “Given that this is supposed to be a ‘seismic shift’ that we’re all worried about, with 145% on an average yield of 5.8% the maximum leverage available is still 73% LTV. 

“Since January the yield has not changed and the maximum leverage is down from 84%, but the product limit was 80% anyway. This is not an Armageddon moment.”

He added that TMW’s ‘first mover’ status in the marketplace to 145% may only be a transitionary approach.

“The mathematical equation suggests that 156% was the appropriate stress test for higher-rate taxpayers post-2020 when the full changes to mortgage interest tax relief would be in place.”


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