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Virgin Money says mortgages subdued and sees a gradual increase in credit card arrears

ended 02. August 2023

In its Q3 results published this morning, Virgin Money said “while overall arrears, excluding government guaranteed loans, remained modest during the period, we continued to see a gradual increase in credit card arrears, as expected, from the low pandemic levels and reflecting the credit cycle”. As a result, it has increased its provisions for loans expected to go bad. It also said “Mortgages broadly stable in Q3 at £57.5bn, in a subdued market”. Free UK newswire, Newspage, asked brokers for their views, below.

4 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whenever financial hardship strikes a family or individual, the first things to go unpaid are the unsecured debts. Most would prioritise paying their rent/mortgage and utility bills and of course food and essentials over servicing their unsecured debt. During the current cost-of-living crisis, it is no surprise to see households borrowing more on credit cards to survive month to month, and eventually running out of credit and sinking into arrears. Mortgages are so far stable for Virgin Money due to the full impact of rate rises not being realised with much of their loan book yet, and the Mortgage Charter allows for some respite and support in the short term. However, a spike in mortgage arrears will surely follow in the months ahead.
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Amit Patel
Adviser at Trinity Finance
The rise in credit card arrears is of no surprise and with people still struggling with their household finances, this trajectory will continue for a while. The Bank of England needs to make a big call this week and let's hope it's the right one, to bring some relief to millions of households.
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John Choong
Senior Equity Research Analyst at Investing Reviews
Virgin Money's results show continued signs of encouragement that the lender is doing well amidst the macroeconomic environment, as evidenced by its £175m share buyback programme. Mortgage lending remains stable while deposits continue to grow. The rise in credit card arrears is the fly in the ointment, but something all lenders are having to deal with in the current climate.
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Paul Welch
Founder and CEO at Largemortgageloans.com
We are talking to many clients that are being forced to sell or restructure their finances to survive. The fast increase in base rates will only accelerate the suffering of so many after surviving the energy and food crisis the experienced during the winter months.