Virgin Money, the banking arm of Richard Branson’s Virgin Group have been the latest in a swarm of mortgage lenders to announce new rate increases to their residential and buy-to-let products. In recent weeks and months, mortgage lenders have been bumping up their rates significantly almost on a daily basis in response to the worsening economic crisis that the UK finds itself in. The Bank of England’s base rate is currently 2.25% up from 0.1% and lenders are increasing their rates in line. Below is a briefing of what these changes are:
Changes to Residential and Buy-To-Let Products
All of these rate changes came into effect on the 12th of October 2022 and may have changed if you are reading this any time after.
Virgin Money have raised its residential and product transfer rates by up to 60 basis points. They have also increased their buy-to-let products by 49 basis points. In a stark contrast to our announcement yesterday that Santander were returning to the 95% mortgage market with new products, Virgin Money have announced that its two-year fixed-rate 95% loan-to-value deals will be withdrawn with immediate effect.
- Their residential 10-year fixed-rate product, a with £995 fee, at 75% LTV, has risen to 5.90%.
- Their residential 5-year fixed-rate fee-saver purchase product, at 95% LTV, has risen to 6.34%.
- They have launched a 10-year residential fixed-rate fee-saver product at 95% LTV, at 6.74%.
- Their 2-year fixed-rate BTL product, with a £995 fee, at 75% LTV, has increased to 6.19%.
- Their 75% LTV 5-year fixed-rate BTL product, with a £995 fee, has risen to 5.99%.
- Specific portfolio BTL rates have also increased with the other deals and have risen to 6.29% and 6.09%.
What Do The Mortgage Brokers Say?
There are no announcements about Virgin increasing any mortgage stress rate tests at the moment however many BTL lenders are doing so, making it more and more difficult for people to borrow money. Louis Mason from Oportfolio mortgages comments:
“We have worryingly seen quite a few lenders, most of them specific BTL lenders, who have increased their mortgage stress rate tests on their online calculators. These tests determine how much a borrower can afford to pay per month on a mortgage and will determine how much mortgage is available to them. Normally the stress test is set at about 5.5% but a lot of lenders have increased them to 6, 7, 8%.
These increases have really thrown a spanner in the works for a lot of borrowers. Just this week we spoke to a client who was looking to remortgage his BTL property and capital raise. At the beginning of the week, he was able to borrow £309,000. The lender then increased their stress rate test, now the maximum he can borrow is £141,000!
The lenders are becoming too cautious when it comes to things like this. We understand that the country is in a state of economic uncertainty, but surely this is an overkill.”
If you or anyone you know wants to discuss the new Virgin Money rates, or just need to discuss your mortgage in general, our advisors are at hand to help with anything you need. Please feel free to give us a call to see how we can help you.