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TMW relaxes ICR to 125% for low rate taxpayers


The Mortgage Works has relaxed its interest cover ratio for buy-to-let lending to lower rate taxpayers from 145 per cent to 125 per cent.

The cut will apply to those paying no tax and basic rate tax on income.

When the Prudential Regulation Authority brought in tougher underwriting standards for buy-to-let at the beginning of the year, TMW moved its minimum ICR to 145 per cent and reduced the maximum LTV to 75 per cent.

But now the lender says it has “developed the capability to separate out ICRs for higher and lower rate tax payers”.

TMW managing director of specialist lending Paul Wootton says: “We are taking steps to make sure that those buy-to-let borrowers who are paying tax at the lower rate see that reflected with appropriate measures of affordability.

“TMW, as part of Nationwide, already robustly assesses the affordability of its buy-to-let mortgages against stress rates that are higher than the borrower’s existing rate, and wanted to take a more flexible approach for those borrowers unaffected by the incoming tax relief changes.”

Landlords’ maximum portfolio size on completion of new applications is three properties.

There is no change to policy for landlords who meet the higher 145 per cent ICR.


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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.


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