Virgin Money has increased mortgage rates by up to 0.75 per cent, while Santander is hiking rates by up to 0.53 per cent, as the property market faces turmoil amid the Iran war. From Thursday, Virgin Money purchase mortgages will rise by up to 0.70 per cent, remortgages by up to 0.65 per cent, and buy-to-let mortgages by up to 0.75 per cent.
This follows Virgin Money's previous increases of up to 0.21 per cent two weeks ago and up to 0.25 per cent a week before that, meaning the lender has raised rates by more than one per cent in just one month. Santander also announced it is increasing new business and product transfer fixed rates by up to 0.53 per cent on Friday.
The rate rises come as the war in Iran fuels fears of global inflation, with UK petrol prices already up 12p per litre to over 144p since the conflict began. Iran has rejected a US peace plan as 'excessive' and issued five conditions to end the war, an Iranian official told state media.
Mortgage experts described the increases as 'extreme' and a 'real shock to borrowers'. Justin Moy, managing director at EHF Mortgages, said: 'Increases of this magnitude are extremely rare, but will have a serious knock-on effect on other high street lenders.' Dariusz Karpowicz of Albion Financial Advice added: '0.75 per cent in a single repricing is not a wobble. That is a lender running for cover.'
Martin Rayner of Compton Financial Services noted that swap rates have risen by nearly one per cent in a month, driving mortgage pricing. He said: 'If tensions ease, we could see rates improve, although likely not as quickly as they increased – meaning borrowing costs may stay higher in the short term.'
