"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"
The Moneyfacts research shows that the average five-year fixed rate at 95% LTV from a building society is 4.01% - 64bps lower than the banks' average of 4.65%.
Consumers can also save substantially on two-year fixed rates from a building society, with 75% LTV products offering a 0.58% saving and 95% LTV rates 0.40% cheaper on average at 3.71%.
Charlotte Nelson, Finance Expert at Moneyfacts, said: “Building societies are making their mark on the mortgage market, leaving the banks behind in their wake. It seems that despite mortgage rates falling to record lows, banks are still failing to compete on cost. In fact, the average two-year fixed rate at 75% LTV provided by building societies is a massive 0.58% lower than that offered by banks.
The domination of building societies is clear to see when you cast your eye over the Best Buy tables, with five out of the six two-year fixed rate mortgage Best Buys being offered by mutuals. More importantly, the lowest deals aren’t just reserved for those with larger deposits; building societies are hitting it out of the park for those with smaller deposits too. For example, borrowers opting for the average five-year fixed rate 95% LTV would find themselves £71.98 a month worse off if they were to choose a mortgage from a bank instead of a building society.
Putting customers first is what mutuals strive for, which is clearly reflected by the fact that borrowers are being offered much lower rates compared to their banking rivals. Building societies also have a lot more flexibility when it comes to their approach to underwriting, allowing them to opt for a more personal approach.
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.”
