The mortgage war is raging, with average rates falling to fresh lows and competition intensifying at every level. It's great news for borrowers as it means they can enjoy record low repayments, but who should they look to if they want to secure the best deal? Well, our research shows that building societies could be the best bet…
Moneyfacts.co.uk has compared the mortgage offerings of building societies and banks and found that building societies are the undeniable winners, with the average rates on offer far outweighing those of banks. The figures show that, in the two-year sector, the average fixed mortgage rate from banks is 2.78%, but building societies easily beat this with an average rate of 2.54%.
This is continued in the five-year sector, and to an even greater extent – the average five-year fixed mortgage rate from banks is 3.51%, while the average rate from building societies is just 3.21%. That's a whopping 0.30% lower!
The gap between banks and building societies is getting wider, too, "suggesting that borrowers may need to look away from traditional banks to get the best deal", said Charlotte Nelson, finance expert at Moneyfacts.co.uk. "It's little wonder that building societies are doing so well as they are dominating the Best Buy charts. Indeed, several building society products are currently leading the market."
"It's disappointing that despite all the money given to banks from the Government-backed Funding for Lending Scheme and the ever-growing price war between providers, that banks are still failing to compete on the overall cost," added Ms Nelson. "Now that local building societies are offering a genuine alternative to banks, perhaps it is time for borrowers to look closer to home to get the best mortgage deal."
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