Virgin Money is set to roll out a series of mortgage rate adjustments and new exclusives this Wednesday (20th September). The lender is cutting fixed rates that carry a £1,295 fee by up to 0.22%, with rates initiating at 4.97%.
Additionally, Virgin Money is launching new purchase exclusive fee-savers that include free valuations. For these exclusives, rates will start at 5.84% for a 65% loan-to-value (LTV) 2-year fixed rate, and extend up to 6.21% for a 90% LTV 2-year fixed rate. For those interested in longer terms, new 5-year fixed rates will also be introduced, ranging from 5.15% at a 65% LTV to 5.54% at a 90% LTV.
For the buy-to-let sector, new exclusives with a 3% fee will be made available. These rates will begin at 4.87% for a 60% LTV 2-year fixed rate, and go up to 5.27% for a 75% LTV 5-year fixed rate.
Other notable changes include a reduction in remortgage exclusive fixed rates by up to 0.21%, and the introduction of buy-to-let remortgage exclusive fixed rates with a £2,195 fee for purchase customers, starting at 5.20%. Furthermore, selected product transfer fixed rates will see reductions of up to 0.37%, with rates kicking off from 5.17%.
Reaction
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“Fantastic news, and what the market needs to see, let’s hope other lenders follow suit. With lenders not lending as much as they targeted at the start of the year, they will all need to fill their order books up and compete for new business, with cheaper rates being a huge factor. Hopefully, the business competition will offset the potentially negative inflation figures, and rates will continue to spiral downward.”
Justin Moy, managing director at EHF Mortgages:
“It’s great to see High Street lenders pricing below 5% for both residential and buy-to-let rates. Virgin Money is definitely pricing to attract applications from a broad set of borrowers, even if the market has some challenges in the coming days. Existing client products have also been reduced, so everyone is feeling the love from Virgin.”
Gary Bush, financial adviser at MortgageShop.com:
“Sub-5% fixed rates from High Street lenders is the direction of travel now we hope. However, it doesn’t seem that long ago that we were praying for a sub-4% rate and then it all went north again. Our advice to clients at the moment is that this week is the most important week of the past year, so let’s see what develops by the weekend, fingers crossed.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It is great to be seeing rates below 5% again, and a clear sign that lenders are desperately fighting for market share as they are far behind targets on completions and lending volumes. Rates in the 4%-5% will be the new normal as things continue to settle. Everyone is now holding their breath ahead of the next inflation results and the soon-after Bank of England base rate review. I would expect inflation to still be much higher than wanted and the Bank of England to raise rates by 0.25% as has already been built into current lending rates on offer.”
Riz Malik, founder & director at R3 Mortgages:
“The buy-to-let range with affordable arrangement fees, especially when contrasted to the hefty rates levied by some lenders, is a welcome relief for landlords who previously had few financing options. With a base rate hike expected on the 21st, it’s reassuring to see lenders like Virgin continuing to lower borrowing costs in order to attract new customers.”
Lee Gathercole, co-founder at Rebus Financial Services:
“Fantastic! This will be welcome news for first-time buyers and home movers and will hopefully give those jumping onto the property ladder some confidence in the market again. As we now look close to the peak of mortgage rates, hopefully we will see other mortgage lenders following suit.”
Ranald Mitchell, director at Charwin Private Clients:
“This is a huge step in the right direction with a prime lender nudging rates below the 5% threshold. Competitors will follow suit, that is only a matter of time, as high street lenders try to make up lost ground in 2023. Questions remain as to whether these latest interest rate cuts are far enough to jolt mortgage market confidence back to reasonable levels again.”
Gary Boakes, director at Verve Financial:
“The lenders generally like to hedge their bets and keep ahead of the curve, so with a high street lender like Virgin going Sub 5% is a very good sign that we are expecting hopefully positive news or at least a positive response from inflation reports and the next MPC meeting.
The next few days will be an indication of whether other lenders are as positive and follow suit with more rate decreases or was this a quick dash by Virgin to win business, only time will tell, but in the meantime, this is fantastic news regardless of the reasons why.”
Katy Eatenton, mortgage & protection specialist at Lifetime Wealth Management:
“What a way to shake things up. 2-year fixed rates are lower than their 5-year rates. These products are definitely priced to attract business, but hopefully they will push the other big lenders to do the same.”
Richard Campo, founder at Rose Capital Partners:
“While it is great to see the return of sub 5% fixed rates, I still think it is too early to start recommending them as a default to clients. 5-year money markets (SONIA) are currently at 4.563% and falling (down over 0.5% from a month ago).
“The inflation figures and of course MPC meeting this week will have a huge sway on what happens over the rest of the year but until we know the outcome of those factors at the end of the week, I would still recommend that clients stay on a penalty free tracker for the time being, where appropriate to do so.
“You just can’t find any positive economic data at present, so pushing on with more rate rises after the expected 0.25% hike on Thursday is only going to inflict more unnecessary pain on the economy in my opinion. I would not be surprised at all if rates come down next year from both the BoE and lenders faster than expected, so fixing in now may start to look expensive in years 3,4,5 of the current batch of fixed rates.”
Peter Stamford, director and lead adviser at Moor Mortgages:
“Seeing rates plunge below the 5% mark feels like the first ray of sunshine piercing through a long, gloomy winter. As High Street lenders, led by the trailblazing Virgin Money, embrace this sunny shift, we all bask in the hopeful glow of potential market stability. Like sunflowers turning to the sun, we eagerly anticipate the industry following suit, brightening the landscape further.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“Rates falling below 5% is a very positive sign and will no doubt help to instill confidence in those who have postponed purchasing a new property. For those that are coming to the end of a mortgage deal and will soon be remortgaging it will be a relief to see rates are not still north of 6%. Whilst falling rates are great news, and certainly a fall to deals starting with a 4 is very welcome, it’s important to not get carried away, we’re not going to see these drops continue down to the sub 2% deals we saw a year or so ago.”
Elliott Culley, director at Switch Mortgage Finance
“It was only a matter of time before one mortgage lender finally broke cover and dropped below 5%. Ideally, 4% rates should start becoming the norm again. Higher inflation is expected again this month due to the higher oil prices but this seems to have been priced in so these rates hopefully will be here to stay.”
Graham Cox, founder at Self Employed Mortgage Hub:
“I’d almost forgotten what a residential rate with a 4 in front looks like. Wonderful news for homebuyers and hopefully the mortgage market has turned a corner now.”
Samuel Gee, director at Manning Gee Investments:
“While it’s too early to declare a definitive trend, Virgin Money’s move suggests a willingness among some lenders to offer competitive rates, possibly signalling increased confidence in the economic environment. The sub-5% rates may be seen as an attractive proposition for borrowers seeking affordability and stability in an uncertain financial climate.
“The real test lies in whether other lenders will take a cue from Virgin Money and introduce similarly competitive products. If this trend gains momentum, it could potentially benefit borrowers across the board, providing them with more options and favourable terms. It’s a development worth watching closely as it unfolds in the ever-evolving mortgage market.”
