Building Society or bank? Which offers the lowest mortgage rates?
Building societies come out on top in the mortgage battle against banks, according to Moneyfacts.
The financial information provider analysed average mortgage rates following the recent increase to the Bank of England Base Rate and found that competition was still strong across the marketplace.
But it’s mutuals that have pipped banks to the post when it comes to the lowest rates.
The average building society two-year fixed rate is 2.27%, 0.06% lower than the average from the main banks at 2.33%.
And the difference is greater when it comes to longer-term deals. The average five-year fix from a building society is 2.59%, which is a significant 0.41% lower than the 3% charged by banks.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “Building societies are offering borrowers a better deal when it comes to rates.
“This wouldn’t be a surprise to first-time buyers, especially as all the places in our Best Buys chart in this sector go to building societies. Building societies clearly want to be seen as supporting first-time buyers, and offering lower rates is just one of the ways they can do this. This group of lenders also tend have a more flexible underwriting process, allowing to them to consider the needs of these borrowers.
“Interest rates are expected to rise in the near future and as a result, borrowers are starting to consider their options. With such a large gap between the main banks and building societies, perhaps it is time, for borrowers to consider looking away from the high street to get the most cost-effective deal, particularly over the longer term.”