Virgin Money PULLS 5% deposit and helps buy mortgages temporarily due to ‘market conditions’ hitting first-time buyers
Virgin Money has temporarily withdrawn its 5% deposit mortgages from the sale to allow it to review “market conditions”.
Products have been unavailable to new customers since 8pm last night, and mortgage brokers have been advised to send all outstanding inquiries to the lender ‘as soon as possible’.
Existing Virgin Money customers wishing to switch their mortgage to a 5% deposit product, also known as a 95% loan, with the bank can still do so.
Virgin Money has pulled its 5% deposit mortgages from the market for new customers
Virgin Money told This is Money: ‘We have made the decision to temporarily withdraw our 95% LTV range for new customers as we review our homebuyer proposal and monitor market conditions.
“Our 95% LTV range remains available to existing customers for product transfer.”
Mortgage brokers have expressed concern about the consequences of this decision for first-time buyers, who are the main users of low-deposit mortgages.
If other lenders follow Virgin Money’s lead, it could become more difficult for those moving up the property ladder to find a suitable mortgage.
Mortgages with smaller deposits are riskier for lenders because repayments are generally higher and the risk of negative equity higher in the event of a decline in house prices.
This means that they sometimes withdraw them from sale in times of financial uncertainty, as they did at the start of the Covid-19 pandemic.
Jonathan Burridge of mortgage broker, We Are Money, said: “This latest comment on market conditions worries me. Are we going to start seeing low deposit mortgages disappear like we did at the start of Covid?