Nationwide Building Society has reduced its stress rate for like-for-like remortgages.
On like-for-like remortgage lending the society will now apply a stress rate of 1% above its standard mortgage rate (SMR at 4.24%), which would currently be 5.24%.
Previously the society applied its standard stress rate of 3% above SMR (7.24%).
Henry Jordan, director of mortgages at Nationwide Building Society, said: “Affordability can be a barrier to better mortgage rates, even when applicants are able to demonstrate a clean payment history.
“This change improves access to our competitively priced remortgage products for such borrowers, whilst maintaining a prudent, responsible approach to affordability assessment.”
Martin Reynolds, chief executive at SimplyBiz Mortgages, added: “The issues that many borrowers have faced when looking to remortgage without additional borrowing has been a source of frustration within the Intermediary market for a while.
“The stress rates used seem excessive versus where the money market see long-term swaps.
“It is really positive to see one of the main High Street lenders move their stress rate to a more realistic figure.
“I am sure that this will be a seen as a positive move with both Intermediaries and their clients.”
The change only applies to borrowers remortgaging to Nationwide without additional borrowing.
To be eligible for the lower stress rate, borrowers can only remortgage up to their existing mortgage value but if a product fee applies to the mortgage, this can be added.
Borrowers can not add early repayment charges to the loan.
The society has also updated its calculator to allow brokers to check how much a client could borrow before they apply.