Societies 'competing with banks' on cheap mortgages
Building societies are beginning to offer stiff competition for banks in the battle to offer the cheapest mortgages, according to research group Defaqto.
While a bank was the cheapest lender for existing borrowers in 2007, building societies took two of the top five places and five of the top ten, according to the company's annual survey.
Skipton and Nationwide were the two societies in second and third places respectively, while HSBC bank was named the provider of the cheapest mortgage.
David Black, principal banking consultant at Defaqto, said that the cost of servicing mortgages rose last year, but said that this was to be expected considering the economic conditions.
"In 2007 there were three increases in bank base rates and one decrease so it is not surprising that the average cost of servicing a standard variable rate mortgage for the largest lenders rose last year by 14 per cent over the cost in 2006," he said.
"While it is acknowledged that standard variable-rate mortgages are only one type of mortgage, their importance may be increasing due to the knock-on effects of the credit crunch, making it more difficult to obtain attractive alternative deals."
Published 2nd January, 2008
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Building societies are beginning to offer stiff competition for banks in the battle to offer the cheapest mortgages, according to research group Defaqto.