"This may be the quickest way we will see sub-5% short-term deals in the coming months."
Virgin Money has launched a new range of residential remortgage exclusives with a 1% fee.
Two-year fixed rates start from 5.09% at 60% LTV and 5.15% at 70% LTV and come with a free valuation and free legals.
The lender has also launched a new range of remortgage exclusives with a £995 fee, free valuation and £250 cashback. Two-year fixed rates are available at 5.26% up to 60% LTV and 5.32% up to 70% LTV. Five-year fixed rates have launched from 4.85% at 60% LTV and 4.90% at 70% LTV.
New purchase exclusives have launched at 85% LTV, with a two-year fix available at 5.46% and a five-year fix at 4.96%, both with a £1,295 fee and free valuation.
In addition, new residential fee-free products have launched, with two-year fixed rates starting from 5.47% at 65% LTV, 5.52% at 75% LTV, and 5.88% at 85% LTV. An 85% LTV five-year fix has also launched at 5.12%.
As part of the changes, Virgin's 90% LTV purchase exclusives have reduced by up to 0.10%, now starting at 5.11%.
Buy-to-let portfolio purchase and remortgage exclusives with a 3% fee have decreased by 0.05%, with rates starting from 4.97%.
Selected product transfer fixed rates have lowered by up to 0.15%, now starting from 4.89%.
Selected core purchase and remortgage fixed rates are down by up to 0.15%,starting from 4.92%.
Selected purchase and remortgage 'Freedom to Fix' rates have increased by 0.05%, with rates starting from 5.60%.
Richard Walker, head of intermediary sales at Virgin Money, said: “We have reintroduced our intermediary exclusive products and made a number of reductions across our residential and buy-to-let range, supporting all segments of the market. These exclusives consist of both purchase and remortgage products including a new range of remortgage two-year fixed rates with a 1% fee offering a lower monthly payment."
Brokers shared their views on the new 1% fee products via Newspage.
Ranald Mitchell, director at Charwin Private Clients, commented: "It's good to see more rate reductions but it is the introduction of percentage fees rather than flat product fees that grabs the attention. Whether these will benefit any particular case is entirely dependent on that set of circumstances, but there will be benefits to some. It seems like the offsetting of mortgage interest to fees is becoming more of a thing in the mortgage space."
Justin Moy, managing director at EHF Mortgages, said that percentage fees could be the trigger to breach the 5% barrier on two-year fixes: “More rate reductions can only be good news for borrowers, as market competition is the main reason why rates continue to edge downwards. There is a very interesting two-year fixed rate deal at 5.09% with a 1% fee, and this may be the quickest way we will see sub-5% short-term deals in the coming months. The take-up numbers will be interesting. Either way, more product innovation from lenders can only be encouraged.”
Elliott Culley, director at Switch Mortgage Finance, added: "Virgin is trying something different here whilst taking a leaf out of Skipton's book of charging a percentage. Once again, this is a lender trying to find ways of attracting more business while rates are a little stagnant. From a broker's perspective, it's good to have options for customers and everyone's situation is slightly different."
