The previous ratio was 130%, which has now dropped to 125%. This will be based on a nominal rate of 5.99% or the actual pay rate if higher up to 80% LTV.
Paul Howard, associate director for Portman Group Intermediary says that after the recent interest rate rises it didn't seem right to factor in more service interest. He says: “We still have confidence in the buy-to-let market. Surveys show the sector is doing well. I feel we are near the top end of the interest rate cycle and, while the Bank base rate has gone up several times in recent months, we have covered this in our calculation. There is an inherent strength in the buy-to-let market. We have re-addressed the calculation on our buy-to-let products to reflect market expectations on interest rates.”