Check where you stand before your current deal ends
Virgin Money is the latest to join the wave(Image: Hispanolistic via Getty Images)
Mortgage holders are being urged to move quickly following rate increases by lender Virgin Money on new loans.
Virgin Money represents the most recent to join this trend of lenders, raising certain products by as much as 0.25%, with two-year fixed rates starting from 3.92% and Shared Ownership packages from 4.01%. Remortgage and product transfer rates have similarly increased.
Adam French, Head of Consumer Finance at Moneyfacts, said: “Conflict across the Middle East means the Bank of England is likely to resist any temptation to cut the Base Rate for now. Lenders are already beginning to change plans and reprice products in response to the likelihood of rates remaining at their current level, or higher, for longer than had been expected.”
The typical two-year fixed mortgage rate has edged upwards from 4.82% to 4.84%, whilst the five-year fix has climbed from 4.94% to 4.96%.Swap rates – which determine fixed mortgage products – have also surged, with two-year swaps increasing from 3.33% to 3.65% and five-year swaps from 3.50% to 3.80%.
Mr French said: “It may not be the news many prospective borrowers will want to hear, but the long-term damage caused by inflation is far worse than a delay to rate cuts. Something that cost £100 in 2020 will cost around £128 today, steadily eroding living standards and household spending power.”
Brokers encourage borrowers to secure deals
Adam Stiles, managing director at Helix Financial Partners, said: “Rates are going up across the board… Should you act quickly to secure something? Yes, but keep an eye on rates if they come down before you complete. Locking in now at least hedges against further rises.”
Simon Bridgland, broker at Charwin Private Clients, told Newspage: “Virgin’s move follows other lenders and shows the early impact of war miles from here. We could see a 0.5% difference in rates this week to the end of next. If you wait, the boat has likely sailed.”
Steven Greenall of Protect & Lend said: “If the Middle East situation calms, rates could fall again – but they move fast both ways. Borrowers should plan now, not panic.”
Nick Harris of Quarters said: “A 0.25% rise won’t stop the market, but it shows mortgage rates can shift quickly. When one major lender moves, others often follow.”
Sarah Fox-Clinch, director at Fox Davidson, said: “This rise reflects higher short-term swap rates, pushed up by turmoil in the Middle East and rising oil prices. Virgin Money was bought by Nationwide in late 2024, so it makes sense they follow suit. Expect other high street lenders to announce increases soon.”
How to protect yourself if rates keep rising
Check where you stand before your current deal ends. Many lenders allow you to secure a new rate three to six months ahead, which acts as a safety net if rates climb further. Extending your mortgage term can lower monthly payments, while making overpayments can cut the balance and future interest – though check your lender’s rules, as most limit overpayments to 10% of the outstanding balance per year before fees apply.
Mortgage brokers can show the full market and find deals that suit your circumstances, including for self-employed borrowers or those with income changes.
Mr French said people need to prepare rather than panic, adding: “Review your deal early, explore your options, and seek advice where needed. That’s the best way to handle any changes in the mortgage market.”