Virgin Money has made changes (Image: Roger Utting Photography via Getty Images)
Hot on the heels of HSBC and Barclays, Virgin Money has confirmed that, from Thursday, it will be slashing selected fixed mortgage rates by up to 0.45%. One broker welcomed the scale of the reductions, noting that “lenders are now reducing rates as aggressively as they increased them”, while another cautioned that future rate rises cannot be ruled out.
In terms of new purchases, Virgin Money is cutting two-year fixed rates by up to 0.37%, five-year fixed rates by up to 0.45%, 10-year fixed rates by 0.40% and Shared Ownership fixed rates by up to 0.45%. For remortgages, two-year fixed rates will fall by up to 0.32%, five-year fixed rates will be reduced by up to 0.35%, while the 75% loan-to-value (LTV) 10-year Fixed Rate fee-saver product will be cut by 0.25%. Virgin Money also revealed that its two-year tracker rates would be increased by up to 0.25%.
Katy Eatenton, mortgage and protection specialist at St Albans-based Lifetime Wealth Management, said: “Cuts this big are great to see and will start to generate confidence across the market. Lenders are now reducing rates as aggressively as they increased them. If more lenders follow suit, this may get the property market moving again after what has been an exceptionally turbulent March and April.”
Charles Hart, business principal at Milton Keynes-based LionHart Mortgages and Protection, urged borrowers to act swiftly as today’s rates could disappear by tomorrow.
He said: “In the current climate, it’s important borrowers seek advice on a wide range of options and, when deals or opportunities present themselves, they need to act quickly, as the deals may not be there tomorrow.”
The market is changing quickly at the moment (Image: courtneyk via Getty Images)
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While describing the Virgin Money announcement as “positive news”, Aaron Strutt, product and communications director at London-based Trinity Financial, suggested the reductions may prove short-lived.
He said: “The issue is that tensions in the Middle East seem to be on the rise again and the money markets could get spooked again. We can’t rule out future rate rises.”
Andrew Montlake, CEO at London-based Coreco, a mortgage broker, also warned that the market backdrop remained far from stable.
He said: “Virgin Money have followed HSBC and Barclays in trimming their mortgage rates, but there is still a lot of uncertainty and rates could rise once again very quickly subject to events in the Middle East. But for now cuts of this size will be welcomed.”
However, Craig Fish, director at London-based Lodestone Mortgages, was distinctly underwhelmed by Virgin Money’s decision to raise its tracker rates.
He said: “Virgin Money’s rate cuts are a clear sign that lenders who moved too aggressively on pricing during the recent swap rate volatility are now having to reprice. When business dries up at the door, the market finds its level.
“Cuts of up to 0.45% across purchase and in particular remortgage products are meaningful and will be welcomed by borrowers. That said, it’s disappointing to see tracker margins quietly creeping up at the same time. Lenders giving with one hand and taking with the other isn’t something that should go unnoticed.”