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What is a stress rate (UK)? Why lenders use it (simple example)

A stress rate is a higher interest rate lenders may use to test affordability. Here’s what it means, why it exists, and a simple example.

Published: 28/03/2026 • Last verified: 28/03/2026

The short answer

A stress rate is a higher interest rate a lender may use in an affordability check to see whether the numbers still work if interest rates rise.

It’s most often discussed in buy‑to‑let affordability, where the lender wants to see that the property could still cover the borrowing even if the pay rate increases later.

A tiny example

Illustrative example:

  • Loan: £200,000
  • Pay rate today: 4%
  • Stress rate used for the test: 6%

Monthly interest at 4% (interest-only):

  • (£200,000 × 0.04 / 12 ≈ £667)

Monthly interest at 6%:

  • (£200,000 × 0.06 / 12 = £1,000)

That higher “tested” payment is why a property can fail affordability at a stress rate even if it looks fine at today’s rate.

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