MortgagesSep 25 2014

Virgin Money cuts rates across the board for mortgages

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Virgin Money has announced a number of rate reductions across its residential and buy-to-let mortgage ranges, including two-year residential fixed rates, which have been reduced by up to 0.26 of a percentage point and five-year residential fixed rates have been reduced by up to 0.20 of a percentage point.

Key changes to the residential core range include a two-year fixed rate at 90 per cent loan to value (LTV) at 3.89 per cent, a reduction of 0.26 of a percentage point.

The three-year fixed rate at 90 per cent LTV is 4.49 per cent, a reduction of 0.19 of a percentage point.

The five-year fixed rate at 70 per cent LTV is available at 2.99 per cent and has a £995 product fee, or a reduction of 0.19 of a percentage point.

Virgin Money’s two-year tracker at 70 per cent LTV at 1.65 per cent has a £995 fee, which amounts to a reduction of 0.10 of a percentage point.

The residential, two-year fixed rate at 60 per cent LTV has a rate of 1.89 per cent with a £995 product fee, a reduction of 0.19 of a percentage point.

In its BTL range, Virgin has reduced its two-year fixed rate at 60 per cent LTV by 0.07 of a percentage point to 2.58 per cent with a £1,995 product fee. At 70 per cent LTV, the rate is 2.69 per cent and also has a £1,995 fee, a reduction of 0.05 of a percentage point. Larger loan exclusive pro­ducts are available on loans between £150,000 and £1m.

REACTIONS

PROVIDER VIEW

Peter Rogerson, savings and mortgages at Virgin Money, said: “The reductions we have made across our mortgage range are great news for borrowers and demonstrate our commitment to providing our intermediary partners with great deals. They help a range of customers, from those with larger deposits to those who are looking to get their foot on the housing ladder.

“The intermediary exclusive range will be available for a limited period only, through all intermediaries registered with a Virgin Money national account.”

ADVISER VIEW

Paul Coffin, an investment and wealth manager at Capital Financial Markets in London, said: “For some while, it had looked as though rates were likely to increase and that they would increase to around 4 to 5 per cent, more normal levels.

The reality is that they have not and more lenders are feeling confident to reduce the rates. Gilt levels have also come down and the latest inflation figures have been benign. So it looks as though rates will not be coming down soon, and when they do they will do so gradually.”

CHARGES

Early repayment charges and application fees apply and will depend on the type of mortgage. Fees are between £995 and £1,995.

Following the fixed rate or tracker period, the loan will revert to Virgin Money’s variable rate for the life of the loan. On Everyday products, an early repayment charge will apply to the outstanding secured loan balance at the time of redemption.

Any overpayments in excess of the 10 per cent annual allowance will also be subject to the early repayment charge.

VERDICT

Virgin is not the first provider to lower its rates and probably will not be the last. Giving borrowers some security in the face of potential rate rises will help homeowners manage their budgets. However, the fees are still hefty and need to be taken into account. Rates will go up and it will be the longer-term fixes that will probably be of most help to borrowers.