Virgin Money makes affordability improvements and provides higher multiples

Virgin Money this morning announced it has “made some improvements to our affordability calculations. This means, for most customers, we can now lend more today than we could last week”.

The lender continued: “We’ve relaxed our rules and removed restrictions, giving more customers access to higher multiples.” The new multiples are:

Purchase or remortgage with additional borrowing

• Income under £50,000 – 4.49x
• Income £50,000 to £74,999 – 5x
• Income of £75,000 or more – 5.5x

Brokers welcomed the news. Justin Moy, Managing Director at EHF Mortgages was positive about the changes: “This move by Virgin Money is a step in the right direction, and where the mortgage is affordable this should reflect a common sense approach. With Nationwide’s improvement for self-employed borrowers also announced this week, it’s evident lenders are looking at more than just rates to boost their application numbers.”

Meanwhile, Bob Singh, founder at Chess Mortgages said it was a sign of lenders seeking to acquire market share: “This is a clear indication of a sweep-up exercise by lenders to reel in as many borrowers as possible. The timing is Christmas come early for many people who just want to get that leg up on the ladder. With rates set to fall, buyers that have been waiting on the sidelines will no doubt be looking at the first opportunity to jump in. As long as the rates keep dropping, affordability will get better.”

Gary Boakes, director at Verve Financial, added: “With house prices not falling as expected, higher interest rates have put more pressure on lenders to be more creative with their criteria and affordability. Virgin are following a number of lenders going down this route to entice buyers back to the market. With rates being higher at the moment, the good news is that buyers don’t seem to want to buy beyond their means, a decision that maybe would have been different a few years ago when rates were low, so I don’t think that the increased affordability is going to have too many long-term issues.

Craig Fish, director at Lodestone Mortgages & Protection was also upbeat, but cautious to boot: “This is a step in the right direction, and Virgin can be applauded for its attempts to help more borrowers. As always, though, any mortgage requires personalised advice. It should never be just about borrowing the maximum available, and more about balancing the affordability of your mortgage with the lifestyle you wish to live alongside home ownership.”