Virgin Money has decided to pull its mortgage range which caters for home buyers who have saved a 5 per cent deposit.
Lenders have been successively cutting their interest rates, with the average five-year fixed rate falling below 6 per cent for the first time in seven weeks yesterday (November 22).
Despite signs the market is returning to normality, yesterday Virgin Money said it had made the decision to “temporarily withdraw” its 95 per cent loan-to-value mortgage range for new customers, as it “review[s]” the product and “monitor[s] market conditions”.
The small deposit product will remain available to existing customers for product transfer, it confirmed in an email update.
This is not the first time Virgin Money has withdrawn from the 95 per cent loan-to-value market.
At the end of August, the lender called time on the product for a period - though this was when lenders were withdrawing from the market en masse.
Virgin Money’s latest withdrawal came into effect at 8pm last night. The lender notified brokers of the change just after 3:30pm.
Director at Trinity Financial, Aaron Strutt, said the lender will “probably come back in a week or so”.
Back in October, brokers speculated whether the uncertainty following former chancellor Kwasi Kwarteng’s "mini" Budget would lead to “the death of the 95 per cent loan-to-value mortgage”.
Just under two months ago, the risk of homeowners ending up in negative equity was greater.
Mansfield-based mortgage director Mike Staton said at the time the easiest way for lenders to avoid this risk was to remove 95 per cent loan-to-value mortgages.
These products were withdrawn back during the pandemic when lenders were trying to grapple with a similar risk.
Lenders eventually returned with these smaller deposit products but it took so long the government was forced to step in to try and kickstart the market.
ruby.hinchliffe@ft.com
