Time To Consider Long-Term Fixed Rates?

Richard Walker

National Sales Manager

Virgin Money

Richard Walker, Virgin Money’s national sales manager, talks about the benefi ts of locking in for the long term.

The Government wants to move towards a market where more borrowers are on long-term fi xed rates, but it hasn’t managed to shift consumer preferences quite yet.

However, we’ve seen the launch of a handful of super-long fi xed rates (some up to 40 years). And there’s already a decent choice of mortgages fi xed for longer than fi ve years. In fact, Virgin Money already has a range of longer-term mortgages of 7, 10- and 15-year fi xed rates. Richard Walker, national sales manager at Virgin Money, said: “We’ve seen fi ve-year fi xes grow in popularity over the last decade, but longer-term deals still account for a small proportion of our lending. However, some borrowers really appreciate the chance to lock in for longer, especially in the current climate.”

Who do they suit?

“Our clients are a mix of remortgagors, home movers and fi rst-time buyers. What they all have in common is their attitude to risk and their preference to secure their monthly repayments beyond the medium term.

“Most feel confi dent they’ll be in their home and the same fi nancial circumstances for the long term. Some are older borrowers with just 10 years left on their term, but we also see fi rst-time buyers who are worried about the impact of rising rates.”

In fact, Virgin Money provides its 10- and 15-year fi xed rate mortgages up to 95% loan to value (LTV), proving these are not simply products for equity-rich older homeowners to cover the remainder of their mortgage term.

However, Walker admits: “Many clients simply want the lowest monthly payments, so a longer-term fi x is never going to appeal when they are shown the costs against a two-year fi x.” Here’s why long-term fi xed rates could be a smart option for some borrowers:

• Competitive rates: Mortgage rates are still at historically low levels, and the premium on longer-term fi xed rates is especially small.

• Save on fees: If your client takes a 10-year fi x, they could potentially save four lots of product fees compared with taking two-year deals over the same period.

• Long-term rate security: Whether they’re risk averse, or their fi nances don’t have much wiggle room, many borrowers crave the security a long-term fi x gives them. • Flexible products: There are caveats to fi xing for a long time, including potential penalties if your client needs to redeem their mortgage early. But many long-term fi xed rates are now fully portable, so your client can take their deal across to a new property if they move home during the fi xed period. • Borrowing boost: Some lenders, including Virgin Money, can off er more generous lending terms, including larger mortgages, to those who are locking into their rate for a longer period – fi ve years or more – because of the certainty of repayments over that period.

Broker benefi ts

Long-term payment security will be the right option for some clients. If you help them to secure a competitive 10-year-plus fi xed rate, it doesn’t mean you won’t see them for a decade.

Their circumstances could change at any point, so stay in touch over the fi xed period and they’re more likely to come back to you when they need a new deal. Building long-term client relationships is a key part of your overall retention strategy.

For more information on Virgin Money’s long-term fi xed rate mortgages, visit our website: https://intermediaries.virginmoney. com/virgin/. You can also get in touch with your Business Development Manager (https://intermediaries.virginmoney.com/ fi nd-your-bdm/), or Regional Service Team (https://intermediaries. virginmoney.com/virgin/contact/support/).

MARCH 2022