Virgin One is claiming the current trend of rem-ortgaging into cheaper
discounted loans has become a victim of its own success and will be extinct
The lender reckons many consumers have wised up to the mortgage industries
practices and are using this knowledge to dodge paying the standard
variable rate on their loans by churning their mortgages.
Virgin is citing switches in stance on discount rates by the likes of
Nationwide, which is offering the same rate to new and existing borrowers,
as the shape of things to come.
It also says according to Council of Mortgage Lenders figures only 40 per
cent of all mortgage borrowers are paying standard variable rates as the
take-up of discount rates has increased.
Virgin One Marketing manager Scott Mowbray says: “Together, these figures
sound the death knell for dual pricing and discount deals for homeowners
looking to remortgage. If current trends continue we estimate lenders won't
be able to continue to offer these deals for more than another four to five
years and some lenders will have to stop before then.
“Transferring to another rate just won't be an option. Consumers have
wised up and aren't prepared to sit on standard variable rates long enough
for traditional lenders to recoup their loss on funding the discount.”