Mortgage borrowers are urged to act quickly as Virgin Money raises interest rates on new loans, anticipating the Bank of England will maintain higher rates due to ongoing geopolitical tensions.
Virgin Money has announced increases in mortgage rates for new loans, urging borrowers to evaluate their options promptly due to looming changes. The lender has joined others in raising rates by up to 0.25%, with two-year fixed rates starting at 3.92% and Shared Ownership deals beginning at 4.01%. These changes come in the context of rising remortgage and product transfer rates, indicating a broader market trend reflecting increasing borrowing costs.
Experts, including Adam French from Moneyfacts, suggest that geopolitical instability, particularly conflict in the Middle East, is influencing the Bank of England's decision-making on interest rates. The expectation is that the Bank will resist lowering the Base Rate due to the likelihood that rates will remain elevated or increase further. This environment prompts lenders like Virgin Money to adjust their products and pricing strategies proactively in anticipation of sustained high rates.
As a result, borrowers are facing an average two-year fixed mortgage rate increase from 4.82% to 4.84%, while five-year fixed rates have similarly climbed from 4.94% to 4.96%. The adjustments in swap rates—a key factor in fixed mortgage pricing—further reflect the shifting landscape in mortgage lending and the ongoing economic pressures that borrowers need to navigate.
