Virgin and Coventry Mortgage Rate Cuts Amid Falling UK Inflation

by | Wednesday 22nd May 2024 | Mortgage News

Virgin reduces rates

Virgin mortgage rate cuts announced

In a significant move for the mortgage market, Virgin Money has announced reductions in its fixed mortgage rates across various buy-to-let (BTL) and remortgage products, effective from today. This announcement comes as the UK inflation rate drops to 2.3%, the lowest it has been in 3 years and much closer to the Bank of England’s target of 2%, potentially paving the way for more favourable lending conditions in the future.

Virgin Money New Mortgage Rate Cuts

As the first lender to announce mortgage rate cuts amid falling UK inflation, Virgin is paving the way way for other lenders to reduce rates…hopefully! Although there is no indication of how long this may take, as in our eyes, a base rate reduction is not likely until August 2024. Lets take a look at the new rate reductions announced by Virgin Money.

Virgin Money’s new rates include:

  • Fixed rate fee-saver mortgages reduced by up to 0.21%, starting from 5.19%.
  • Fixed rate mortgages with a £995 fee cut by up to 0.19%, starting from 4.89%.
  • Exclusive fixed rates with a £2,195 fee lowered by 0.10%, now starting at 4.57%.
  • BTL product transfer fixes reduced by up to 0.15%, starting from 4.51%.
  • Residential product transfer fixes at 65% and 75% loan-to-value (LTV) decreased by 0.10%, beginning at 4.43%.
  • Shared ownership fixes cut by up to 0.10%, with new rates starting at 4.59%.
  • Select new fixes reduced by up to 0.13%, starting from 1.09%.

Mortgage Broker Reaction

These rate reductions are timely, as the fall in the UK inflation rate to 2.3% could prompt further rate cuts from lenders, making borrowing more affordable for consumers. However, as brokers we have to play devils advocate and say that we have still not hit the target of 2%, and inflation can be volatile. Meaning that there is no assurance that the next inflation figures released won’t show an increase. The Bank of England has also held the base rate steady at 5.25% for a number of months now and there is also no guarantee that we will see a significant rate reduction before August 2024. Although we all hope that we do.

Coventry Building Society Also Reduces Residential Mortgage Rates, But Increases Buy-To-Let Rates

In addition to Virgin Money’s rate changes, Coventry Building Society has also announced updates to its mortgage offerings. Interestingly however, as well as reducing some residential product rates, Coventry has also made increases to their buy-to-let offerings:

Residential Mortgages:

  1. New Borrowers: All fixed rates at 65% – 75% LTV will be reduced, while fixed rates at 85% – 95% LTV (excluding First-Time Buyer Exclusives) will increase.
  2. Existing Borrowers: All 2-year fixed rates at 65% – 75% LTV with a fee will be reduced, and all 5-year fixed rates at 65% – 80% LTV with a fee will also see reductions. However, 2-year, 3-year, and 5-year fixed rates at 85% – 95% LTV will increase.

Buy to Let & Portfolio Buy to Let Mortgages:

  1. New Borrowers: All 2-year fixed rates, 5-year fixed purchase rates at 65% LTV with no fee, 5-year fixed purchase rates at 75% LTV, and 5-year fixed remortgage rates with no fee will see increases.
  2. Existing Borrowers: All 2-year fixed rates, 5-year fixed rates with no fee, and 5-year fixed rates at 75% LTV with a fee will increase.

Speak To A Whole-Of-Market Mortgage Broker

As inflation comes down, we predict that we will see more lenders reducing rates. Although perhaps not as quickly and perhaps not as significantly as many people hope. There will be reductions, but as always, if inflation rises again and the base rate does not change, we could easily be back to square one.

Navigating these shifts can be complex, which really highlights the importance of seeking guidance from a qualified and experienced whole-of-market mortgage broker. At Oportfolio Mortgages, we are committed to providing expert advice tailored to your individual circumstances, helping you secure the most competitive mortgage deals available. Our comprehensive market knowledge ensures you benefit from the latest rate changes and economic trends. For more information on how these updates might affect you or to explore your mortgage options, contact Oportfolio Mortgages today.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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