Big 3 are a bad bet for mortgages
HOMEOWNERS loyal to the Scottish "big three" banks are paying considerably over the odds for their mortgages. Bottom of the pile are customers paying Bank of Scotland’s standard variable rate, who would have been almost £1,200 richer last year had they instead opted for top-of -the table HSBC’s SVR. Or more than £23,000 over the term of the average UK mortgage.
Worst still, Bank of Scotland and Clydesdale Bank customers are being penalised for their patriotism as customers of their sister English banks Halifax Bank and Yorkshire Bank, respectively, paid less for their mortgages. In the case of Bank of Scotland, £121 less.
Royal Bank does at least charge Natwest customers the same rate as RBS ones. However, its rivals claim that pricing anomalies can be explained by differences between the markets the sister banks operate in and because each subsidiary within a banking group is responsible for pricing its own products.
The revelation of the considerable difference between the best and worst SVR mortgage comes in Moneyfacts, the annual survey of the UK’s leading mortgage lenders.
HSBC held top slot in the survey - the same position as six months ago. It charged only £5,261.75 total annual interest on a £100,000 loan based on the standard variable rate. HSBC, the only high street bank to appear in the top ten, is currently running a January sale which makes its SVR even more competitive.
Samantha Owens, mortgage research editor at Moneyfacts, said: "Borrowers who do not wish to switch their deal repeatedly may do well to look at the lenders who feature high in this survey."
Indeed, if the gap of the last year were repeated for the 20-year term of the average UK mortgage RBS customers would pay £22,013 more than HSBC customers. The overpayment for Clydesdale’s customers would be £22,849 and for Bank of Scotland SVR mortgage holders it would be £23,470.
Despite this week’s decision to hold Bank of England base rates, previous increases pushed up the cost of borrowing. The annual amount charged by HSBC has increased by £577 on the same comparison exercise six months ago. Egg was in second place with a total of £5,283.44 interest, followed by Nationwide Building Society with £5,512.68. Mutual societies and direct lenders dominate top positions.
"It’s a myth that all banks are the same and our No 1 ranking as best value mortgage provider is another step in our effort to dispel this," said Sian Lehrter, HSBC’s head of mortgages.
Edinburgh-based internet bank Intelligent Finance, part of HBOS, came fourth, charging £5,538.80, followed by West Bromwich Building Society for borrowers of five years and more with £5,589.35.
Standard Life Bank, Direct Line and Newcastle Building Society were the next most competitive. Clydesdale Bank was also among the most expensive lenders on the list at £6,404.
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