The provider’s two-year fixed rate 80 per cent LTV product has been reduced by 20 basis points to 2.75 per cent.
Changes have been made to its 90 per cent LTV fixed rate fee-saver mortgage, too. It has been reduced by 10 basis points to 4.35 per cent.
In addition, the two-year fee-saver tracker at 80 per cent LTV has been reduced by 20 basis points to 3.19 per cent.
Reductions have been made to Virgin Money’s two-year fixed-rate buy-to-let range as well. The 60 per cent LTV fixed-rate mortgage has been lowered by 20 basis points to 2.69 per cent, and the 70 per cent LTV product has been reduced by 20 basis points to 2.99 per cent.
Other products in the range that the provider continues to offer include three-year fixed-rate products up to 70 per cent LTV at 2.49 per cent.
It also offers five-year fixed-rate products up to 70 per cent LTV at 3.18 per cent.
All of Virgin Money’s fixed-rate products come with a £995 product fee, except for the fee-saver mortgages, where product charges are waived. The buy-to-let range, meanwhile, is charged at 2.5 per cent.
These interest rate reductions follow similar rate cuts by competitors as the mortgage market in the UK continues to grow after a difficult period during the recession.
According to the Bank of England, mortgage approvals in January 2014 rose to 76,947, which represented the highest level in six years.
REACTIONS
Provider view
Peter Rogerson, commercial director for mortgages and savings at Virgin Money, said: “When pricing our mortgages, we take into account market interest rates and adjust the range and product mix from time to time, depending on market conditions and the competitive landscape. This is normal, and we continue to support customers across all segments.”
Adviser view
David Hollingworth, associate director for Bath-based London & Country Mortgages, said: “In general terms, it represents an improvement, which is always a good thing. In terms of the 90 per cent LTV two-year fixed-rate fee-saver mortgage, Furness offers 3.45 per cent at 90 per cent LTV with a £779 fee, so it depends a lot on the importance of the fee. There is always a place for no-fee, and some will prefer to pay higher rates for this benefit. The 80 per cent LTV two-year fixed-rate mortgage is also up against some stiff competition, such as Leeds Building Society, which offers 2.19 per cent with a £999 fee. Building societies like West Brom, Coventry, Skipton and Woolwich are all competing hard with some very good rates, which is why Virgin has brought rates down to get it back up to pace. It is a big-name lender, and that will help, as its reduced rates – although better – are still not market-leading. But they are enough to get it back in the frame, especially its buy-to-let deals.”
Charges
All fixed-rate products come with a £995 product fee, except for the fee-saver mortgages. The buy-to-let range, meanwhile, is charged at 2.5 per cent, and overpayments in excess of the 10 per cent annual allowance are subject to an early repayment charge.
Verdict
Virgin Money’s decision to drop rates was necessary to keep it in the frame in what has become an increasingly competitive market, but it has still been outshone by a handful of other lenders. Whether it gets much business from these deals will therefore depend on its customer service and reputation, together with the temptation from cash-strapped buyers to utilise its fee-saver products.
