Building societies are winning the mortgage rate war by offering lower rates than their bank counterparts, according to Moneyfacts.
Societies typically offer 2-year fixes at 1.74% to 75% loan-to-value and 3.71% to 95% LTV, 0.58% and 0.40% cheaper than banks. Meanwhile for 5-year fixes societies typically charge 4.01% to 95% LTV and 2.34% to 75% LTV, 0.64% and 0.66% cheaper than equivalent mortgages offered by banks.
Charlotte Nelson, finance expert at Moneyfacts, said: “The gap between the banks and building societies suggests that now is the time for borrowers to look away from the big banks and consider something closer to home for a more competitive and cost-effective deal.”
Ray Boulger, senior technical manager at John Charcol, felt the figures could be somewhat misleading but said building society mortgages are typically cheaper at high LTVs.
He said: “This is misleading in isolation since it ignores other factors. Rate is important but if lenders have tight criteria with a fantastic rate that few qualify for it’s irrelevant.
“As a rule of thumb we find building societies are cheaper at higher LTVs but banks tend to be cheaper at 60% LTV. But as with all these general rules there are going to be some exceptions.
“As well as looking at the rate and the fees one also needs to look at other aspects of the deal like freebees such as cashback.
“If it’s a relatively small loan that can be can relevant and with a 2-year deal it’s more relevant than a 5-year deal.”