Barclays has changed its affordability calculations for residential and buy-to-let mortgages, in a move that could allow some borrowers to access larger loans.
The bank said residential applicants taking products at 85% loan to value or below will now be assessed using a lower minimum stress rate. It has also increased income multiples for joint applicants with a gross annual income of between £35,000 and £75,000.
Barclays said the changes mean more customers may be able to borrow more when buying a home, with its affordability calculator updated to reflect the revised approach.
For buy-to-let borrowers, the lender has introduced a dynamic stress rate calculated as a fixed margin above the chosen product rate. Barclays said this would make assessments more closely aligned to an individual borrower’s circumstances while retaining a responsible lending approach.
According to the bank, some buy-to-let customers could be able to borrow up to £20,000 more under the new calculations. Its buy-to-let affordability calculator has also been updated.
The changes follow other recent adjustments by Barclays to affordability criteria for homebuyers, including lower stress rates and higher maximum loan amounts for higher loan-to-value borrowing across its mortgage range.
In notes accompanying the announcement, Barclays said the buy-to-let example was based on a single applicant earning £40,000 a year and taking a mortgage on a buy-to-let property valued at £250,000 with expected annual rent of £12,150.
