Virgin cuts back on mortgage sales

Just a month after licensing its credit card brand and handing over 550,000 accounts to Westpac, Virgin Money has cut back on mortgage sales.

A notice has been posted in the home loan section of the group's website that reads: "The cost of money is currently so high that we're unable to bring you the great value home loan we're synonymous with. So it makes sense for everyone if we hit the pause button for a bit on our home loan and focus on helping people find a good deal."

A Virgin spokesperson said it was business as usual for existing customers and that new mortgage business would "continue to be written but at much reduced volumes."

When Virgin launched its home loan business in 2006 it offered a Virgin-branded loan funded via Macquarie Securitisation and a range of third-party products.

Since Macquarie Bank announced its own retreat from the mortgage market it has been hiking up the rates on its loans, making them hard for partners such as Virgin to sell.

According to Infochoice figures in the months since August, when the latest Reserve Bank interest rate tightening cycle started, Macquarie put up the rate on its standard variable rate loan by 41 basis points in August, 25 points in November, 18 points in January, 30 points in February, 40 points in March, 20 points in April and 20 points earlier this month.

Macquarie's increase of 1.94 percentage points during that period compares with the overall increase of one percentage point in the cash rate. Macquarie's standard variable rate is now 9.17 per cent.