First-time Buyers

Building societies winning the mortgage war

Adam Williams
Written By:
Adam Williams

Borrowers could make big savings by taking out a mortgage with a building society rather than a bank.

Research by Moneyfacts found the average five-year fixed rate mortgage at building societies was available at 3.51%.

This compares to an average rate of 3.21% at UK banks – a 0.3% difference.

In the two-year market, the typical building society had a rate of 2.78% on offer. Again this was ahead of the average bank rate of 2.54%.

Charlotte Nelson, finance expert at Moneyfacts, said borrowers needed to make sure they were getting the best deal in the market.

“Moneyfacts has compared the mortgage offerings of building societies and banks and found that building societies are the undeniable winners.

“Not only do building societies come out on top when it comes to rates, but the gap between their offers and those from banks is getting wider, suggesting that borrowers may need to look away from traditional banks to get the best deal.

“It is little wonder that building societies are doing so well as they are currently dominating the best buy charts. Indeed, several building society products are currently leading the market.

She added: “It is disappointing that despite all the money given to banks from the Government-backed Funding for Lending Scheme and the ever-growing price war between providers that banks are still failing to compete on the overall cost.

“Now that local building societies are offering a genuine alternative to banks, perhaps it is time for borrowers look closer to home to get the best mortgage deal.”