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Virgin Money first lender to increase mortgage rates following Budget

Journalist: Justin Moy, Contributing Editor

ended 31. October 2024

Following the Budget, Virgin Money announced a wave of rate increases across its fixed range, with increases of up to 0.15% from 8pm last night. Though the markets' reaction to the Budget was initially benign, perhaps due to all the pre-Budget leaks, gilt yields subsequently spiked suggesting investors were becoming increasingly nervous. Brokers said it's too early to know whether this is a trend as Accord mortgages announced reductions at the same time, with one remarking: “This shows that the dust has not yet settled following Labour's shake of the fiscal snow globe.”

 

7 responses from the Newspage community

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Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Within hours of the Budget, Virgin Money announced increases to their rates, although at the same time Accord mortgages announced reductions. This shows that the rate dust has not yet settled following Labour's shake of the fiscal snow globe. Swap rates over the coming days should reveal the direction of travel ahead of the Bank of England base rate decision next week.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Rachel Reeves’ tax increases are swiftly coming home to roost, and the timing couldn’t be worse. As if the market wasn’t already volatile enough, we now see lenders like Virgin Money responding to Labour’s Budget by hiking mortgage rates. With rates rising with only a few hours’ notice, landlords and homeowners alike are left scrambling to absorb the shock. It's remarkable how little foresight was applied here. Did anyone in government consider the ripple effect these tax changes would unleash? The impact on housing affordability and investment is unmistakable, too. For a government that claims to champion working people, Labour’s approach appears staggeringly tone-deaf. By layering tax increases onto an already overheated market, they’re practically guaranteeing that housing costs will climb even higher. This short-sightedness is likely to put even greater strain on households and landlords struggling to keep up with rising costs.
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Editor
Justin Moy
Managing Director at EHF Mortgages
Virgin Money was the first lender to react to the Budget, with increases across most fixed-rate options. We now need to see whether this becomes a trend, or is just some poor timing by Virgin. But for many borrowers this will be just another layer of disappointment.
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Simon Bridgland
Director at Charwin Private Clients
As Reeves read out her riot act to the nation, her plans ricocheting around Westminster’s corridors and onto the televisions of the UK, the first of what could be many lenders was busy delivering its own verdict. Virgin's increase may seem a little modest, but it is an increase none the less. At the moment it’s tricky to read how others will respond as lenders have been at odds with one another on rate changes for a couple of weeks now. But one thing is for sure: more will follow their example and increase rates.
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Elliott Culley
Director at Switch Mortgage Finance
We won't fully know the impact of the Budget on mortgage rates for a few days, once the dust has settled. The OBR has suggested interest rates may decrease more slowly as a result of the Budget, but Virgin's decision to increase rates is more likely a coincidence and bad timing as this is just a recalculation on lower LTV products and not a full increase across all products.
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Kim McGinley
Director & Specialist Broker at VIBE Finance
Virgin Money’s decision to raise rates right after the Budget announcement feels like ill timing, particularly when many are watching closely for economic stability signals. At this point, it’s too early to say if this move will spark a broader industry shift or simply reflect Virgin’s own strategic response. Mortgage holders and those looking to borrow will be keen to see whether other lenders follow suit. But for now, patience is key; it’s important to observe how the market reacts and whether this adjustment becomes a trend or remains an isolated decision.
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Iain Swatton
Director at Exemplar Financial Services
Virgin Money’s decision to hike mortgage rates right after the Budget is an intriguing move, and it's likely that other lenders will adjust their own rates as they digest the Budget’s impact. Notably, Virgin also raised their buy-to-let rates, though the extra stamp duty on second properties already adds a significant burden for landlords. At this stage, there are more questions than answers. Whether rates will trend up or down remains to be seen.