Lower stress rates and higher income multiples aim to lift borrowing capacity for certain applicants
Barclays has adjusted its affordability calculations for both residential and buy-to-let mortgages, easing the tests used to assess how much some borrowers can take on.
For residential lending, the bank has cut the minimum stress rate applied to mortgages at 85% loan-to-value and below. The change is expected to increase the maximum loan available to certain customers, particularly those close to affordability limits.
Barclays has also raised loan-to-income allowances for joint applicants with a combined gross income of between £35,000 and £75,000 a year. The lender told brokers that more cases have been hitting LTI caps following earlier rule changes, and said the latest update is intended to help applicants who might otherwise be restricted by those limits.
The bank has updated its residential affordability calculator to reflect the revised approach.
In buy-to-let, Barclays has introduced a “dynamic” stress rate. Rather than using a single fixed figure, the stress rate will be set as a margin above the customer’s selected product rate, with the intention of aligning the assessment more closely to the pricing of the loan while maintaining a focus on responsible lending.
Barclays said the new BTL calculations could increase borrowing by as much as £20,000 in some scenarios, and has updated its buy-to-let affordability calculator accordingly.
According to the high street lender, the latest measures follow a wider set of changes aimed at improving affordability across its mortgage range, including adjustments to stress rates and maximum loan amounts for higher LTV cases.
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