Building Societies Trump Banks for Competitive Mortgage Rates

Recent research indicates Britain’s building societies are better at providing cheaper mortgage rates than banks. Moneyfacts revealed the outcome of their research into the leading banks and building societies around at present. Eight banks were included in the research, along with numerous building societies. The most competitive rates currently available are all offered by building societies. These include The West Brom, Yorkshire Building Society, and Buckinghamshire Building Society. Five-year deals offer the greatest savings While building societies came out on top in both the five-year and the two-year deals, the biggest savings were noted among the five-year mortgage rates. The main banks offered an average interest rate of 2.33% on a two-year fixed rate deal. This contrasted with a lower average rate of 2.27% for the building societies, revealing a difference of just 0.06%. However, the picture was much rosier when assessing the five-year fixed deals. The main banks offered an average of 3.00% in this area, while the building society average came in much lower at 2.59%. That represents a saving of 0.41%. “Know the market” “This research shows how important it is to shop around when looking for a mortgage, regardless of whether you’re a first-time buyer or you’re looking to move home,” said Darren Pescod, CEO of The Mortgage Broker Limited. “It is very easy to stick with the big names, your own bank, and other popular high street sources. However, in doing so, you could be missing out on the cheapest deals around. Over the lifetime of the fixed rate, a cheaper deal could represent a significant saving. If you know the market before you choose your preferred mortgage provider, you will stand a chance of getting a much more competitive deal.” Best deals in the higher LTV range The research further revealed the most competitive mortgage deals are likely to be in the higher loan-to-value range. That is great news for first-time buyers and those with smaller deposits. Building societies seem particularly eager to support people who are trying to get onto the housing ladder. One of the best ways to make this happen is by lowering their rates and offering the most affordable deals they can. Looking beyond the high street With big-name banks and building societies occupying territory in many high streets across the country, it is no small surprise to realise lots of would-be mortgage applicants will look here for deals. But as Darren Pescod explains, they could be missing out by doing so. “It’s understandable that most people will start in the high street when they are looking for deals,” he explained. “Even if they look online, the first names to come to mind will be those they are familiar with from their local area. But as we can see, exploring the market more widely brings many less well-known building societies into play too. These could be the ones that will have some of the best deals on the market today, regardless of the length of mortgage required.”