Mortgage products offered by building societies generate lower interest rates on average than banks. The findings from independent research group Moneyfacts showed that out of the top 20 mortgage lenders, 14 were mutuals.
The research looked at the total annual interest payments on a £50,000 standard variable rate (SVR) mortgage between 1 January 2001 and 31 December 2001. Six building societies managed to make the top 10.
The Building Societies Association (BSA) commended the research. Adrian Coles, director general at the BSA, said: ‘Once again, independent research has confirmed that if you want a cheap mortgage, building societies are the place to go.’
Internet bank Egg maintained the top spot for the third consecutive year, with annual payments for 2001 at £2,978.64, followed by HSBC and Nationwide. Abbey National held bottom place in the table with annual payments at £3,531.71, followed by Cheltenham & Gloucester and Alliance & Leicester.
Melanie Stewart, head of research at Moneyfacts, said: ‘Egg demonstrated that its customers are reaping these dividends. Nationwide’s policy of fair pricing has helped it move into third position. Compared with Abbey National, Egg’s customers paid £553.07 less in mortgage interest payments over the year. However, if you had applied to change to one of the new rates available from Abbey you could have saved around £300.’
Top five mortgage lenders
Total annual interest payment on a £50,000 standard variable rate mortgage
2001 2000 3-year total
Egg £2,978.64 £3,312.22 £9,300.56
HSBC £3,000.35 £3,668.55 £10,147.20
Nationwide BS £3,020.90 £3,598.07 £9,905.61
Standard Life Bank £3,139.72 £3,444.67 n/a
Cheshire BS £3,145.30 £3,460.65 £9,811.01
(loyalty rate after five years)