2007's cheapest mortgage

Thursday, 03 January 2008 12:00

HSBC was the cheapest mortgage lender in 2007 according to independent analysis of standard variable rate (SVR) products.

Skipton Building Society and Nationwide picked up second and third spots respectively in the battle for the lowest-priced mortgages, compiled following research by the financial data collection organisation, Defaqto.

The study revealed borrowers with HSBC paid £3,361.99 in 2007 for their mortgage. This was £532.39 cheaper than the most expensive SVR deal in the market.

Skipton's borrowers paid £3,435.07 and Nationwide's customers forked out £3,485.07.

Meanwhile, Bank of Scotland offered the most expensive deal at £3,894.38 with Royal Bank of Scotland and Clydesdale Bank coming close at the more costly end of the market.

Defaqto's research, which was based on the amount of gross interest payable on a £50,000 interest-only mortgage provided by top lenders in 2006, showed building societies overall provided the cheaper products.

The Defaqto "top ten" cheapest mortgage lenders featured two building societies in the top five places and five in the top ten.

The average cost of servicing a SVR mortgage for the largest lenders rose in 2007 by 14 per cent, according to Defaqto.

David Black, principal consultant of banking at Defaqto said this came as no surprise since there were three increases in bank rates and one decrease.

He added: "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."

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