Last year when the second part of the PRA changes came in, I predicted that these would not last too long and that lenders would start tweaking the figures when they saw the effect it was having within the market. This has now started with a couple of lenders reducing the interest rate they stress your portfolio at from 5.5% to 5%. I can see more of this happening in 2018 as I still feel there are too many lenders for the market with more waiting in the wings.
One positive result of the changes is more lenders are now using top slicing. This is particularly useful when you have an outside income. It is when a lender uses this income to top up the amount that is required to meet the rental stress calculation. Normally you must meet the 125% cover from the rent and the rest can come from your disposable income.
Two years ago, we had the mad rush to beat the extra 3% stamp duty deadline in March and as most mortgages were taken out on two-year products these are coming up for review now. If this affects you, please start the process now as you may not have experienced the PRA regulation changes and could struggle to remortgage onto a competitive rate. If you are not taking any additional money, then there are plenty of lenders who will still work off the old rental calculations for a re-mortgage. If you do require additional funds then again, there are lenders who are still working off the old figures.