Where does your mortgage lender come in this league table of thirty leading lenders? Find out if your lender is a winner or a sinner!
Independent financial researcher Defaqto has released its annual survey of mortgage lenders, which shows a massive difference in the interest rates charged by leading lenders.
Defaqto analysed the standard variable rates charged during 2004 by the UK's thirty biggest mortgage lenders on a £50,000 interest-only mortgage. (A standard variable rate, or SVR, is the bog-standard rate charged to all borrowers who aren't enjoying a special-rate deal, such as a fixed, discounted, capped or tracker rate.)
Although it's worth noting that most borrowers aren't paying an SVR, these standard rates remain a useful benchmark to measure the competitiveness of the big players. And millions of borrowers are paying ridiculously high SVRs, so these surveys act as annual reminders to switch and save!
One important point to note is that, thanks to five hikes in the Bank of England's base rate from November 2003 onwards, 2004 was a more expensive year for homeowners. According to Defaqto, the average mortgage interest bill for 2004 was around an eighth (13%) higher than 2003's figure.
Nationwide BS leads the way for the mutual (member-owned) building societies, taking second place. However, four out of the top five lenders in the latest survey are banks, led by high-street giant HSBC. Here are the results for the top thirty. (In order to create a level playing field, Defaqto has excluded some specialist lenders, plus any privilege or loyalty rates.)
League table: Top thirty
mortgage lenders in 2004 | | | |
|---|
| Lender | Annual
interest
bill (£) | £ more
than HSBC | Effective
interest
rate (%) |
| HSBC (Apply via the Fool) | 2,638 | - | 5.28 |
| Nationwide BS | 2,764 | 126 | 5.53 |
| Intelligent Finance (IF.com) | 2,780 | 142 | 5.56 |
| Co-operative Bank | 2,895 | 257 | 5.79 |
| Direct Line (Apply via the Fool) | 2,949 | 311 | 5.90 |
| Standard Life Bank | 2,959 | 321 | 5.92 |
| Skipton BS | 3,010 | 372 | 6.02 |
| The One Account (Apply via the Fool) | 3,042 | 404 | 6.08 |
| Yorkshire BS | 3,091 | 453 | 6.18 |
| AVERAGE | 3,093 | 455 | 6.19 |
| Principality BS | 3,128 | 490 | 6.26 |
| Britannia BS | 3,138 | 500 | 6.28 |
| Portman BS | 3,150 | 512 | 6.30 |
| Capital Home Loans | 3,155 | 517 | 6.31 |
| GMAC-RFC | 3,161 | 523 | 6.32 |
| Chelsea BS | 3,161 | 523 | 6.32 |
| West Bromwich BS (1) | 3,166 | 528 | 6.33 |
| Cheltenham & Gloucester/Lloyds TSB | 3,166 | 528 | 6.33 |
| Halifax | 3,166 | 528 | 6.33 |
| Abbey | 3,166 | 528 | 6.33 |
| Leeds & Holbeck BS | 3,170 | 532 | 6.34 |
| Cheshire BS (2) | 3,185 | 547 | 6.37 |
| Woolwich/Barclays | 3,186 | 548 | 6.37 |
| Yorkshire Bank/National Australia Group | 3,186 | 548 | 6.37 |
| Northern Rock (3) | 3,188 | 550 | 6.38 |
| NatWest | 3,190 | 552 | 6.38 |
| Royal Bank of Scotland | 3,190 | 552 | 6.38 |
| Coventry BS (4) | 3,191 | 553 | 6.38 |
| Bristol & West | 3,194 | 556 | 6.39 |
| Alliance & Leicester | 3,197 | 559 | 6.39 |
| Bank of Scotland | 3,226 | 588 | 6.45 |
(1) £2,811 for members who had been mortgage borrowers for at least five years.
(2) £2,934 for members who had reached the end of their product tie-in and had earned a loyalty discount.
(3) £3,063 for members who had been mortgage borrowers for at least seven years.
(4) £3,060 for members who had been mortgage borrowers for at least 61 months.
So, unlucky SVR borrowers with the Bank of Scotland paid almost £50 a month more than HSBC's happy SVR borrowers for the same £50,000 home loan. Yikes! What's more, HSBC topped the tables in the 2003 and 2002 surveys, too, making it Britain's fairest mortgage lender by far. As for the other end of the table, the same lenders keep cropping up year after year, including all but two of the UK's ten largest lenders.
Note that the average mortgage interest rate charged by these top thirty lenders during 2004 was 6.19%, yet only nine lenders beat this rate. Another way of putting this is to say that twenty-one of these thirty lenders (70%) are charging well over the odds, with rates between 6.26% and 6.45%.
Finally, take the time to find out if you're paying too much for your home loan. Do some research online and then demand a better deal from your lender. If it refuses, get the ball rolling and switch to a lender that really wants your business. This could save you £100+ a month !
PS:Moneyfacts has just released its annual survey of the UK's top 35 mortgage lenders, based on an interest-only SVR mortgage of £100,000. HSBC topped this survey, too, with online bank Egg a close second. The interest bill ranged from £5,262 at HSBC to £6,435 at The Mortgage Business - almost £100 a month more!
More: Check out the deals in our Mortgage centre | Competition: we'll pay your mortgage for two years!
Cliff owns shares in HBOS, parent company of Bank of Scotland, Halifax, Intelligent Finance and The Mortgage Business.
