A specialist lender has introduced measures aimed at giving landlords a much-needed affordability boost by lowering the stress rates applied to its buy-to-let and commercial mortgage products. This move comes at a time when many property investors continue to face mounting financial pressures caused by higher borrowing costs and tighter lending rules.
Over the past few years, stress testing has become one of the biggest obstacles for landlords seeking finance. With interest rates remaining elevated, lenders have been cautious, often applying high stress test rates that make it difficult for investors to qualify for loans or achieve the level of borrowing they need. For some, this has meant missed opportunities to expand their portfolios or refinance existing properties.
Redwood Bank has now taken steps to ease that burden. The lender has announced that it will reduce its stress testing thresholds across a range of variable, two-year, and three-year fixed-rate products. This change is intended to make borrowing more accessible for landlords who have struggled under the weight of stringent affordability assessments.
According to Redwood, this adjustment is a direct response to broker feedback. Many advisers have expressed frustration over high stress test levels, which often prevent deals from progressing even when clients can comfortably meet repayment obligations. The lender hopes the updated criteria will help more transactions cross the finish line.
Tom Worbey, senior lending product manager at Redwood, explained the motivation behind the change. “Brokers tell us one of their biggest frustrations is stress rates,” he said. “By lowering our residential buy-to-let and commercial mortgage stress rates, we’re giving brokers more flexibility and helping landlords achieve the leverage they need.”
He added that in the current economic climate, affordability remains a top priority for landlords and lenders alike. Many landlords are still grappling with increased operational costs, reduced rental yields, and general market uncertainty. By revising its stress testing approach, Redwood aims to give property investors a fairer chance to secure funding despite these challenges.
The update applies to both Redwood’s residential buy-to-let and commercial lending ranges. The affordability calculations for these products have been revised to reflect the lower stress rates, meaning landlords may now find it easier to qualify for loans or borrow slightly higher amounts compared to before.
In addition to revising its stress testing criteria, Redwood has rolled out a new tiered pricing structure across its lending portfolio. The new pricing model is designed to give brokers and landlords a broader range of options based on individual borrower profiles, making the lender’s products more flexible and competitive.
These changes form part of Redwood’s wider strategy to continually refine its offerings and respond proactively to feedback from brokers and property professionals. By aligning its lending approach more closely with current market conditions, the bank is aiming to maintain strong relationships with intermediaries and help landlords remain active in a challenging market.
At the same time, the Dudley Building Society has also announced rate reductions across its Expat buy-to-let mortgage range. Its five-year fixed product at 70% loan-to-value (LTV) has been cut to 5.59%, while the equivalent at 80% LTV has been reduced to 5.89%. These products are available on a capital and interest, interest-only, or part-and-part repayment basis, offering flexibility for overseas landlords.
Both of Dudley’s updated mortgage products come with a £1,999 arrangement fee and include an early repayment charge that gradually reduces over the five-year term — 4%, 3%, 2%, 1%, and 1%. Borrowers also have the option to make overpayments of up to 10% each year without incurring penalties, allowing them to manage their loans more efficiently.
These rate adjustments from both Redwood and Dudley indicate that some lenders are beginning to loosen their affordability rules to support landlords who have faced months of limited lending opportunities. The changes could help increase borrowing activity and provide a sense of renewed momentum within the buy-to-let market.
While stress testing remains a vital part of responsible lending, small reductions like those introduced by Redwood can make a significant difference in real-world affordability. Even a slight easing of criteria can determine whether a landlord qualifies for a mortgage or misses out on a potential investment.
These updates also suggest a cautious sense of optimism in the property finance sector. Lenders appear to be recognising that while maintaining financial prudence is crucial, supporting landlords through flexible lending practices is equally important to keeping the market healthy.
For landlords and brokers navigating the complexities of today’s mortgage environment, the changes provide a glimmer of relief. As lenders like Redwood and Dudley adapt to evolving conditions, property investors may finally begin to see more accessible options emerging in what has otherwise been a challenging borrowing landscape.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property