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Virgin Money makes affordability improvements and provides higher multiples

Journalist: Newspage News Desk

ended 05. October 2023

Virgin Money this morning announced it has “made some improvements to our affordability calculations. This means, for most customers, we can now lend more today than we could last week". The lender continued: “We’ve relaxed our rules and removed restrictions, giving more customers access to higher multiples.” The new multiples are: 

Purchase or remortgage with additional borrowing

  • Income under £50,000 – 4.49x
  • Income £50,000 to £74,999 – 5x
  • Income of £75,000 or more – 5.5x

Brokers welcomed the news. Justin Moy, Managing Director at EHF Mortgages was positive about the changes: "This move by Virgin Money is a step in the right direction, and where the mortgage is affordable this should reflect a common sense approach. With Nationwide’s improvement for self-employed borrowers also announced this week, it’s evident lenders are looking at more than just rates to boost their application numbers.”

Meanwhile, Bob Singh, founder at Chess Mortgages said it was a sign of lenders seeking to acquire market share: “This is a clear indication of a sweep-up exercise by lenders to reel in as many borrowers as possible. The timing is Christmas come early for many people who just want to get that leg up on the ladder. With rates set to fall, buyers that have been waiting on the sidelines will no doubt be looking at the first opportunity to jump in. As long as the rates keep dropping, affordability will get better.”

Gary Boakes, director at Verve Financial, added: "With house prices not falling as expected, higher interest rates have put more pressure on lenders to be more creative with their criteria and affordability. Virgin are following a number of lenders going down this route to entice buyers back to the market. With rates being higher at the moment, the good news is that buyers don't seem to want to buy beyond their means, a decision that maybe would have been different a few years ago when rates were low, so I don't think that the increased affordability is going to have too many long-term issues."

Craig Fish, director at Lodestone Mortgages & Protection was also upbeat, but cautious to boot: “This is a step in the right direction, and Virgin can be applauded for its attempts to help more borrowers. As always, though, any mortgage requires personalised advice. It should never be just about borrowing the maximum available, and more about balancing the affordability of your mortgage with the lifestyle you wish to live alongside home ownership.”

Lewis Shaw, owner at Shaw Financial Services, also urged caution: “Enhanced income multiples are all good and well however consumers should be cautious borrowing at these levels. Caveat emptor has never been more important for buyers.”

But Graham Cox, founder at Self Employed Mortgage Hub was largely unimpressed: "It's great to see lenders being more flexible in their lending policy. However, it's disappointing the increased loan-to-income multiple of up to 5.5 x income doesn't apply to the self-employed, other than to contractors. Company directors, LLP partners and sole traders are left languishing at the usual 4.49 income multiple."
 

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7 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
Perhaps the biggest headache for many, with their borrowing power diminishing over the past 12-18 months as both mortgage rates and the cost of living have taken hold. This move by Virgin Money is a step in the right direction, and where the mortgage should be affordable this should reflect a common sense approach. With Nationwide’s improvement for self-employed borrowers also announced this week, it’s evident lenders are looking at more than just rates to improve their application numbers.
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Editor
Bob Singh
Founder at Chess Mortgages
This is a clear indication of a sweep-up exercise by lenders to reel in as many borrowers as possible. The timing is Christmas come early for many people who just want to get that leg up on the ladder. With rates set to fall, buyers that have been waiting on the sidelines will no doubt be looking at the first opportunity to jump in. As long as the rates keep dropping, affordability will get better.
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Editor
Craig Fish
Director at Lodestone Mortgages
This is a step in the right direction, and Virgin can be applauded for its attempts to help more borrowers. As always though, any mortgage requires personalised advice. It should never be just about borrowing the maximum available, and more about balancing the affordability of your mortgage with the lifestyle you wish to live alongside home ownership.
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Gary Boakes
Director at Verve Financial
With house prices not falling as much as expected, rising interest rates have put more pressure on lenders to be more creative with their criteria and affordability. Virgin are following a number of lenders going down this route to entice buyers back to the market. With rates being higher at the moment, the good news is that buyers don't seem to want to buy beyond their means, a decision that maybe would have been different a few years ago when rates were low. All in all, I don't think that the increased affordability is going to have too many long term issues.
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Graham Cox
Director at Bridging Hub
It's great to see lenders being more flexible in their lending policy. However, it's disappointing the increased loan-to-income multiple of up to 5.5 x income doesn't apply to the self-employed, other than to contractors. Company directors, LLP partners and sole traders are left languishing at the usual 4.49 income multiple.
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Steven Hargreaves
Mortgage and Protection Adviser at The Mortgage Co
Another sign that lenders need to secure their share of the mortgage market at the moment. Whether it's lenders reducing their margins on interest rates and creating a rate war, or easing criteria, they all need to be lending money. The applications today are the completions in Q1 2024. Hopefully, we do not see clients over-committing and buying/borrowing beyond their means.
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Charles Breen
Founder at C B
This could be a massive boost to first-time buyer, and will give them that much-needed opportunity to get that dream home that they may have been struggling to afford before. News like this, coupled with decreasing rates, makes buying a first home or even moving home much more appealing to many and could be exactly the type of move we need. If followed by other lenders, this could be the beginning of a very busy Christmas period and new year.