Nationwide is set to buy Virgin Money in a £2.9bn deal that would put it in a serious position to challenge the UK’s major banks.
Newspage asked brokers what this could mean for borrowers and the wider mortgage market.
One said: “Nationwide is firing a shot across the bows of Halifax with this acquisition, threatening their status as the UK’s number one mortgage lender by market share”.
Another added: “I can guarantee you that brokers across the land are praying Nationwide ditch the Virgin Money application system sharpish.”
A third said: “Virgin Money’s current systems are like using a dial-up modem from 1999.” The views of brokers can be found below.
Graham Cox, founder at Self Employed Mortgage Hub:
“Nationwide is firing a shot across the bows of Halifax with this acquisition, threatening their status as the UK’s number one mortgage lender by market share. Nationwide’s reach will also increase banking competition on the high street, which can only be a good thing for consumers, given how complacent some of the established banks are.”
Ben Perks, managing director at Orchard Financial Advisers:
“This is quite the power play by Nationwide. This is a merger that could be greatly beneficial for the consumer, as while both lenders have decent systems and processes and they have differing criteria. If they can take the best bits from both we would have quite a formidable option available to borrowers.
“On the flip side, with this merger and the talks between Coventry and Cooperative, it looks like the number of lenders available to borrowers will reduce in 2024. Is this willingness to sell up due to Consumer Duty? Whatever the reason, at a time when borrowers need as many options as possible, it’s a shame to see lender numbers reducing.”
Riz Malik, director at R3 Mortgages:
“We need more competition in the mortgage market, not less. With two different styles of mortgage lending, it will be interesting to see what emerges from this acquisition. However, given the outlook for the housing market after yesterday’s damp squib of a Budget, we may see further consolidation as more lenders are forced to compete for a smaller market.”
Gary Bush, financial adviser at MortgageShop.com:
“There are two sides to this coin. My first reaction is that we need the number of lenders to grow not contract, as consolidations remove that competitive edge and lessen the variety of underwriting conditions and choices available to consumers. On the other side of the coin, Virgin has been promising its partner finance companies a new IT system to process transactions on for over five years and it demonstrated to those in the know that they didn’t really feel they were in the game for the longer term. Virgin Money’s current systems are like using a dial-up modem from 1999.”
Justin Moy, managing director at EHF Mortgages:
“Consolidation within the mortgage market is inevitable when thin margins and reduced application numbers are set to continue for a long period of time. This will inevitably reduce competition in the residential market, potentially costing borrowers over the long term, and with the different borrower focus of each lending brand, it will be interesting to see what Nationwide would focus on. This could trigger further consolidation or make space for new innovation from smaller lenders eager to grab some market share.”
Katy Eatenton, mortgage & protection specialist at Lifetime Wealth Management:
“It will be interesting to see how this plays out as both lenders’ criteria are very different and Virgin Money is one of very few that have a more favourable approach to calculating self-employed income for limited company directors. Will it mean they also take Clydesdale in the deal?”
Akhil Mair, director at Our Mortgage Broker:
“The acquisition of Virgin Money by Nationwide could shake up the UK’s banking landscape for the better and be a boost for mortgage borrowers. We encourage more mergers and acquisitions in the financial sector as they often lead to better offerings and benefits for consumers.”
Gareth Davies, director at South Coast Mortgage Services:
“I didn’t see this one coming. They’re two institutions with completely contrasting approaches to lending, so it will be interesting to see what changes are made moving forward. I can guarantee you that brokers across the land are praying Nationwide ditch the Virgin Money application system sharpish.”
Richard Jennings CeMAP, founder & managing director at Richard Jennings Mortgage Services:
“This move from Nationwide will remove two lenders from the market as Virgin Money operates under the Clydesdale bank banner too, each with their own lending risk profile and niche client markers. What it does continue to demonstrate is the strength of the building society model. I imagine it will take some time to fully integrate fully but once done this will provide Nationwide with a much larger market share. For clients however this further reduces competition in the market which can only be a negative.”
