Major bank hikes mortgage rates amid market turmoil as brokers warn other lenders will follow
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A MAJOR bank has hiked rates on some of its mortgages amidst market turmoil as experts warn more lenders could follow. Virgin Money has upped rates on a selection of fixed deals by up to 0.2 percentage points. Two and five-year fixed rates for customers with a loan-to-value mortgage of 65% or 75% have increased by 0.2% percentage points.
![[Three small red houses atop stacks of British coins, resting on banknotes.]](https://www.thesun.co.uk/wp-content/uploads/2025/01/file-photo-dated-12-09-963480111_5a799b.jpg?strip=all&w=960)
Meanwhile, selected shared ownership fixed rate deals have increased by up to 0.2 percentage points. Product transfer five-year fixes for those with a 65% loan-to-value have been hiked by 0.1 percentage points. The increase to the lender's mortgages come amidst market turmoil following record government borrowing.
Interest rates on government bonds soared to their highest level in 26 years last week, with investors concerned about the UK's economic growth prospects, partly due to inflation. As bonds fall in price, the interest rates, or yields, on them rise meaning it's more expensive for the government to borrow money.
This, in turn, can drive up swap rates, which are used by lenders to price fixed-rate mortgage deals. Fears have already been raised around 700,000 mortgage holders coming off fixed deals this year could end up paying more for new deals than previously expected due to the higher swap rates.
But brokers are also warning fixed deals could be driven up in the more short to medium term. David Hollingworth, associate director at L&C Mortgages, said: "There’s been a steady flow of lender price changes feeding through since last week and it’s highly likely that there will be more to come.
