Virgin, from today, has gone sub-4% on 5-year fixes, at 3.95%. Importantly, it is also offering a 3.99% 5-year fix for purchases. Free PR platform, Newspage, sought the views of brokers and shared them with IFA Magazine.
Craig Fish, Director at Lodestone Mortgages & Protection: “This rate war just keeps on giving. When HSBC announced its market-leading 5-year fixed rate on Tuesday we all knew it wouldn’t be long before another lender would enter the ring and Virgin stepped up. Crucially, the offer from Virgin goes not one but two steps further. Not only does their remortgage rate beat HSBC in terms of rate and fee it also offers cashback, and better still they have a sub-4% offering for people purchasing who are lucky enough to have a 40% deposit. Admittedly these products are still only available to those with a chunk of equity or cash, but it’s all heading in the right direction. I believe that by the spring, the market is going to be alive with great offers ‘springing’ up like daffodils, so those mortgaging now should, subject to circumstances, hold off on fixing as better rates almost certainly lie ahead.”
Lea Karasavvas, Managing Director at Prolific Mortgage Finance:“A big physiological barrier has been broken with Virgin being one of the first lenders to price sub-4% on a 5-year fixed rate today for a purchase deal. Lower swap rates last week and a rush for early market share have created a price war, which has benefited borrowers and may well have installed much needed confidence in the market. Virgin have demonstrated since the start of the year a desire to lend, leading the pack on pricing, and have gone one step further by breaking the 4% barrier. As the competition heats up, this benchmark may well create a ripple effect causing more lenders to join them in the chase for market share.”
Samuel Mather-Holgate, Independent Financial Advisor at Mather and Murray Financial: “The price war for 5-year fixes is now in full swing. It’s like the lenders know something the Bank of England doesn’t. Despite 2-year fixes remaining high, lenders seem to be reducing rates all the time for five year fixes. This is because they can foresee the rate slashes coming during that period and know they will still make a profit with a lower fixed rate. Maybe that means it’s time for a tracker?”
Justin Moy, Managing Director at EHF Mortgages:“This is exactly what the market needs, namely more lenders offering sub-4% options for clients. More banks offering these kinds of deals will only help bring more affordable deals to us all. This may be one small step for lenders, but it’s one giant step for borrowers.”
Lewis Shaw, Founder & Mortgage Expert at Shaw Financial Services:“This is to grab headlines and nothing more. This type of lending isn’t sustainable and will lead to a flurry of unnecessary activity, poor service levels and mismanaged expectations. Moreover, given it’s nailed on that rates will fall towards the end of the year and throughout 2024, anyone jumping into a five-year fixed rate now, unless they’ve got a small balance and a short term left, will likely rue the day they listened to the hype. Remember the hype from certain TV journalists about “mortgage rates are below 1%” in 2021, yet they were mainly two-year deals, and I was battling to get people to take longer-term fixes as it was obvious what was coming down the line? Well, here we are again. Act in haste, repent at leisure.”
David Conway, Director at Clayhall Financial Services Ltd: “This should come as no surprise as banks’ confidence in the recovery has grown. Any downturn is now expected to be shallower and shorter than previously thought and thus far this is holding up. Expectations of 5% base rate are all but gone and SONIA rates (the bank trading price for money) are 3.5% for 5 years and 3.95% for 2, suggesting there is a margin for these to fall further. As buyers feel this confidence, we may see a housing market recovery. For now, it’s flat but the signs look good.”