Foundation Home Loans’ commercial director, Simon Bayley, believes that much of the issue surrounding concerns from the Financial Policy Committee (FPC) around stress testing in buy-to-let could be mitigated if more lenders offered longer term fixed rate products.
Bayley argues that offering the ability to match mortgage repayments with rental charges over longer periods, provides a degree of certainty with fixed rates that pay rate mortgages cannot offer. A longer term fixed product also allows landlords to provide better rental cost certainty to their tenants.
He said: “The FPC is right to look at underwriting standards and stress testing in buy-to-let. It is important to offer the right product for each customer’s circumstances, so as well as offering our very popular 4.39% five year fixed product, we continue to offer our shorter fixed and tracker products to deliver a strong product selection.
“We continue to be happy to offer our pay rate product up to £500,000. Most of our products are geared towards fixed rates and the tracker and variable rate products we offer are more than covered by our current rental cover calculators. We are very comfortable that our criteria is attractive to borrowers while we continue to be prudent, minimising the risk of overextension in our underwriting.
“With more new lenders coming to market it is important, that we all work to high underwriting standards, not compromised by the need to gain market share.”