Virgin Money And Halifax Pioneer 'Rate Reducer' Mortgage Initiative

Virgin Money And Halifax Pioneer 'Rate Reducer' Mortgage Initiative



In a groundbreaking move, Virgin Money and Halifax have become the first to embrace a novel mortgage offering tailored for purchasers of new-build properties, with potential interest rates plunging below the 1% mark, as reported by Jo Thornhill.
The unique mortgage product, dubbed Rate Reducer, is set to debut next Monday (26 February), marking a significant milestone in home financing. Developed by Own New, an initiative established in 2022 to democratize home ownership, the Rate Reducer operates by reallocating cashback incentives from homebuilders to mortgage providers. This cashback, which could amount to as much as 5% of the property's purchase price, will be utilized to offset mortgage interest, resulting in reduced monthly repayments for buyers.



To illustrate, a buyer contributing a 10% down payment on a new property valued at £350,000, with a 5% cashback incentive, could witness their fixed-rate mortgage drop from 4.79% to 3.78% over two years. Remarkably, purchasers with substantial deposits may even secure rates as low as 0.99%. Own New's Rate Reducer initiative extends its benefits to all buyers, not exclusively first-time purchasers, who can opt for either two or five-year fixed-rate agreements. Presently, the scheme is exclusively accessible through Barratt Developments; however, an additional 60 homebuilders are poised to join starting next week, according to Own New. Among the lenders committed to following Virgin Money and Halifax's lead and participating in the program are Gen H, Furness Building Society, and Perenna.



David Hollingworth, from London & Country Mortgages, remarked, "Rate Reducer will help address a significant hurdle for many prospective buyers, offering greater flexibility in monthly outgoings."
He further emphasized, "While borrowers will need to meet standard affordability criteria, planning is crucial. Following the conclusion of the agreement, there's a possibility that interest rates may remain elevated, resulting in higher payments."
Hollingworth added, "While various schemes have aimed to assist buyers with modest deposits, this innovative approach introduces another viable option for buyers."
Own New is already known for its Deposit Drop initiative, implemented in collaboration with Darlington Building Society, aimed at aiding homebuyers in Yorkshire and the North East in securing 95% mortgage deals.