Stress testing on investment BTL mortgages

TomEdison said:
The lender is concerned not with what average fall in values/rentals in a future housing market, um, correction might be, but how much the value/rental of a single property might fall.
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Yes and no. At origination loans are stress tested individually but after that it is the performance of the loan portfolio that matters.

TomEdison said:
but they conceal wide variations.
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Not really. In Ireland changes of prices both across the country and between types of assets are well correlated. The same supply and demand factors apply in the market for credit and properties are relatively close substitutes.

There is no scenario where apartments in Limerick fall 20% but houses in Ballsbridge fall 40%.
 
Recently applied for a btl mortgage for the minimum amount of ltv. We have no mortgage and a significant cash sum in savings with 50k combined income (I sold my company so have a small passive income now). Already have one property fully rented with no mortgage so was applying for a btl mortgage so we could write off some profit against mortgage interest.

We were declined for a btl because rental income isn't counted towards "income" and our existing income isn't high enough and they stress tested the mortgage going up 2%

Thought it was interesting as it shows they really are being careful with btl mortgages nowadays
 
So essentially your bank expects purchasing a BTL requires cashflow to support 0 rent plus covering a mortgage at c7%? Very risk averse, or is it down to volumes being so low they don't actually want the business. Was it always like this in recent years?
 
No idea. But yeah was a bit surprising. Definitely lines up with what others have said in that it seems like they really don't have to give btl mortgages out
 
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