Virgin Money: Complimentary guidance on mortgages
Assuming inflation continues to move towards its 2% target, we anticipate that the Bank of England Bank Rate will be approximately 4% by the end of the year. For borrowers who are facing challenges with affordability, this would be seen as positive news. However, when it comes to determining mortgage pricing, the actions taken by the Bank of England on the base rate are just one aspect of the whole picture. If swap rates continue to decrease, lenders will offer lower mortgage rates, providing consumers with a wider range of options at more affordable prices. Lenders are eager to provide loans and are motivated to increase their business following a dismal year in 2023.
Matt Smith, a mortgage specialist at property portal Rightmove, stated that although today did not bring the first Bank Rate reduction, each passing day brings us closer to it. He emphasized that it is a matter of “when” rather than “if” we witness the initial decrease from the current rate of 5.25%. Over the past six weeks, mortgage rates have experienced a little increase. However, it seems that the pressure on lenders to raise rates has decreased, as some lenders have already reduced rates in response to the recent positive inflation data. Consequently, there is a possibility that the average mortgage rates will decrease throughout the following week. If this is true, it will mark the first instance of average rates decreasing in more than a month.
“Homebuyers should not anticipate a sudden decrease in interest rates, but the two announcements made this week should ideally enhance the confidence of homebuyers, which may have been lacking at the beginning of 2023.” Virgin Money has stated that it will boost the interest rates on some fixed-rate packages for house purchase and remortgage. These deals are available through brokers and apply to loans with greater loan-to-value ratios. This announcement comes despite the Bank of England’s decision to keep interest rates unchanged.
Starting from 8 pm tonight (21 March), the lender, which is currently being targeted for a £2.9 billion takeover by Nationwide Building Society, will slightly increase certain fixed rates for new customers by a maximum of 0.05 percentage points. The bank is currently providing a special offer for purchasing a property with a fixed interest rate for five years. This offer is available for customers who can provide a deposit of 10% of the property’s value. The interest rate for this offer is 4.67%, which is somewhat higher than the previous rate of 4.65%. Additionally, there is a charge of £1,295 associated with this offer.
For customers who are looking to remortgage their property, the bank is offering a fee-free five-year fixed-rate deal. This offer is available for customers who have a loan-to-value ratio (LTV) of 70%. The interest rate for this offer is 4.89%, which has increased from the previous rate of 4.85%. Virgin clients have the option to transfer to a different agreement with the bank after two years without incurring any penalties, thanks to the fix-and-switch offer.
Virgin Money is also raising the interest rates on certain fixed rate arrangements for existing customers who want to switch to a new deal, by a maximum of 0.05 percentage points. The minimum interest rate for five-year fixed mortgages has been reduced to 4.38%.
