Virgin working towards remo proc fee
Peter Rogerson, commercial director of mortgages at the bank, said the move was not possible currently due to technology but that he was making every effort to change this in a bid to support both brokers and clients wishing to remortgage.
News of the plans follows research by Virgin Money and YouGov among customers currently on lenders’ standard variable rates who could benefit from remortgaging to a fixed rate.
The research found that borrowers on SVR wrongly perceived that remortgaging to a fixed rate would be too expensive – just 3% of those surveyed said they would actively consider remortgaging.
But Virgin’s analysis showed that a borrower with a loan of £160,000 at 60% loan-to-value on an average AVR of 4.92% could save £6,300 over two years by remortgaging to a 2-year fixed rate of 1.59%.
A borrower in the same position choosing a 5-year fixed rate would save in excess of £12,000 over the five year term.
Rogerson said the lender had been in discussions with its distribution partners and had found that brokers were also wrongly perceiving there to be little value for clients on SVR to remortgage.
He said: “There will always be customers who don’t want to remortgage from SVR because they value having no early repayment charges or they don’t want to switch from interest-only to capital repayment.
“But our research shows that the vast majority of clients on SVR would benefit from remortgaging now, before the base rate starts to rise. In fact it is incumbent on our industry to tell them this and help them remortgage.”
The Virgin research found that while just 3% of SVR borrowers would consider remortgaging without a prompt from their broker, this rose to 14% of borrowers saying they would remortgage having been told they could save money.
This rose to 50% of borrowers on SVR saying they would remortgage when they were told the level of savings they could make came to thousands to pounds a year.
In a bid to support client education Rogerson said Virgin Money had prepared standard letters for brokers to send to existing clients on SVR demonstrating the savings they could make.
He said brokers worried about earning less by spending time with clients looking to remortgage rather than purchase should consider that a remortgaging customer, likely to save thousands, would be “less stretched” on affordability and would therefore be in a better position to take protection – affording brokers an additional income stream.
He added: “This is a win for lenders, brokers and most certainly customers who could save staggering amounts of money.”
The latest figures from the Council of Mortgage Lenders showed remortgaging fell 2% month on month in April to £4.1bn – down 2% from the previous year.