Santander has improved its affordability calculations for residential borrowers and lenders following the Bank of England’s base rate cut.
The high street bank says from today (19 February):
- Residential affordability rates have been reduced by 25 basis points
- It has updated household expenditure figures
- Retained property interest coverage ratio for landlords has been reduced to 125% from 145%
The lender asks brokers to use the affordability calculator on its website “to find out what your clients could borrow”.
It says full mortgage applications submitted by 10pm on Tuesday 18 February will not be affected by these changes.
Full mortgage applications submitted from 6am on 19 February will be assessed using the new lending policy.
It adds that if a “material change” is made to an existing application from 6am on 19 February, the case will be reassessed using the new criteria.
Earlier this month, the Bank of England reduced the interest rate by 0.25% to 4.5%, with Bank governor Andrew Bailey promising “gradual and careful” cuts throughout this year.
But today the inflation rate jumped to 3% from 2.5% in January, the highest level in 10 months, which pushes back the outside chance of a further reduction in March to May, according to traders.
