Stress rate

Stress rate: A higher interest rate a lender uses to test whether the mortgage payment still looks affordable if rates rise.

It is a test, not a price. The rate you pay at the start of a deal is shown separately on the illustration. Each lender sets its own approach, for example by adding a margin to the pay rate or the follow-on rate.

The test is applied alongside your income, regular outgoings and other credit commitments, so two people with the same loan can get different answers.

In the UK, the Bank of England’s Financial Policy Committee withdrew its own affordability test (a 3-point rise on the reversion rate) from 1 August 2022. The FCA’s responsible-lending rules (MCOB 11.6) still require lenders to allow for likely rate rises over the first five years unless the rate is fixed for at least five years, so each lender now sets its own stress rate.

How it affects a remortgage

A stress test is one reason a cheaper advertised remortgage rate can be out of reach. A new lender assesses you afresh, and if your income or commitments have changed since you last borrowed, the test may not be passed.

A product transfer with your existing lender is often assessed more lightly, which is one reason people stay put. Compare its cost anyway: in the example, the fee-free 6.22% transfer is about £329 ahead of the 5.97% new-lender deal over 24 months once fees are counted.

If you are close to a lender’s limit, the cheapest rate on paper may not be one you can take. Knowing that early can save paying fees on an application that does not complete.

Stretching the term lowers the tested payment but adds interest overall, so check both figures.

Common mistakes

• Reading the stress rate as a price. You pay the deal rate; the test rate only checks resilience.
• Assuming every lender uses the same buffer. Since 2022 each lender sets its own approach under the FCA’s rules.
• Stretching the term to pass without counting the cost. On the example, 25 years instead of 22 adds about £23,822 of interest at 5.97%.
• Forgetting commitments. Car finance or card balances reduce what passes the test.

Edge cases

• Fixes of five years or more. The FCA consumer page notes that the stress test applies to fixes shorter than five years.
• Same-lender switches. The FCA notes no affordability check is usually needed if you are up to date and not borrowing more.
• Income changes. A drop in income since the last mortgage can mean failing a new lender’s test even with a clean record.
• Joint to sole. Removing a borrower means the remaining income has to pass alone.
• Extending past retirement. The FCA notes that if a longer term goes beyond your expected retirement age, the lender may carry out an affordability check.

Where to go next

• Affordability calculator — change the stress buffer and see the payment.
• Credit and affordability when switching — what a new lender reassesses.
• Remortgage vs product transfer — when staying put suits.
• When to remortgage — why early checks help if affordability is tight.

Sources checked 2 November 2026

• FCA: support with mortgages and interest rates — offers typically valid 3 to 6 months, reversion rates, same-lender switches, ERCs and stress testing.
• FCA: the FPC’s mortgage market recommendations — the FPC affordability test withdrawn from 1 August 2022; MCOB 11.6 still applies.

Figures marked example are illustrative only, not a quote and not lender, broker or FCA-regulated advice. Definitions are plain English for this site, not the wording in your offer. The definitions and explanations are in our own words. Last checked 2 November 2026.

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