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Egg, Nationwide and HSBC have once again topped the chart of mortgage lenders offering the best value to borrowers paying the standard variable rate.
A survey this week by financial data provider Moneyfacts allows mortgage borrowers to see how much their interest payments are costing them and shows the sizeable difference in costs between lenders. It also highlights how much money can potentially be saved by switching.
The results reveal, for ex ample, that over the past 12 months, a typical Egg standard variable rate borrower with a £100,000 mortgage has paid out £1,275 less in interest than an equivalent bor rower with Abbey National.
Moneyfacts analysed the UK's top 35 mortgage lenders and looked at the total interest someone with a £100,000 standard rate mortgage would have paid out over the past year from July 1 2001 until June 30 2002. But because the survey is based on lenders' standard variable rates, it is arguably relevant only to the estimated 30% of borrowers who are on SVRs and not to the millions of people paying special rates on discounted, fixed-rate and tracker deals.
Online bank Egg comes out cheapest with a total annual interest bill of £5,119. Egg's current SVR is a very competitive 4.74% and borrowers wanting to remortgage to the bank are being offered a free valuation and free legal fees.
In second and third place respectively are Nationwide (£5,139) and HSBC (£5,152), who have switched places since Moneyfacts last published a survey, six months ago. Intelligent Finance, the internet bank owned by the Halifax, enters the chart for the first time in fourth place (£5,240) followed by two other newer lenders, Standard Life Bank (£5,550) and Direct Line (£5,609) in fifth and sixth place respectively.
Five of the top 10 cheapest lenders are building societies; Nationwide, Yorkshire (£5,759), Principality (£5,844), Portman (£5,968), and Chelsea (£6,022).
However, if lower loyalty rates offered by some lenders to their long-standing borrowers are taken into account, the West Bromwich, Cheshire, Skipton, Coventry and Britannia building societies and Northern Rock also score highly.
For example, newer Skipton borrowers have paid a total of £6,103 over the past year on a £100,000 mortgage - £300 more than Skipton borrowers of more than two years, who have paid £5,803, and £500 more than those who have borrowed from the society for more than four years, who paid £5,603.
As was the case in the last half-yearly survey, the UK's second largest mortgage lender Abbey National is at the bottom of the table with a total annual interest bill of £6,394.
This figure, however, is based on Abbey's old standard variable rate (SVR) of 6.1%, which has since been replaced for new borrowers and existing borrowers who ask to switch to lower tracker rates, which are pegged to the Bank of England's base rate.
The 30% of Abbey borrowers (nearly 500,000 people) who are still on the 6.1% SVR have been invited to switch to the new tracker rates, currently 4.9% and 5%, according to the bank, a move that would save many of them hundreds of pounds a year.
Second from bottom are Alliance & Leicester and Cheltenham & Gloucester, part of Lloyds TSB; each records a total annual interest bill of £6,294. Other poor performers include Bristol & West (£6,280), Bank of Ireland Mortgages (£6,278) and Royal Bank of Scotland (£6,275).
The Halifax, the UK's largest lender, comes in with a less than impressive £6,149. But, again, this is based on the bank's original SVR, which is currently 5.75%, and which the bank says has been largely superseded by new lower-rate deals such as its 5% tracker, to which existing borrowers may be transferred on request.
A Halifax spokesperson says: "We can't force people to transfer, but there's no reason on earth why anyone should still be paying that 5.75% SVR." In fact, the competitive nature of the mortgage market at present means that virtually anyone still on an SVR - unless you are temporarily locked in by high redemption penalties - could save money by shopping around and remortgaging to a cheaper deal.
Melanie Stewart of Moneyfacts says: "There is no excuse for complacency today. Remortgage packages are available and there are vast sums of money to be saved."
David Hollingworth of independent mortgage brokers London & Country, says: "While this survey is a wor thy thing to look at to see who is providing the best SVR, lenders are screaming out for new business at the moment and therefore offering deals which mean borrowers can do a lot better than the very lowest SVR.
"There are, for example, two-year discounts around on rates below 4%, which represents a saving of nearly 1% on even the lowest SVR. And 1% less means a saving of £1,000 a year on a £100,000 mortgage."
Good discounted deals available at the moment include a two-year discount at 3.85% from Alliance & Leicester, which has no redemption penalties at any time. This package has an arrangement fee of £295 on loans of up to £125,000.
Also attractive is a two-year discount at 3.95% from Abbey National, which does include penalties for the discounted period, but comes with no arrangement fee and offers free valuation and legal work on remortgages.
"If you remortgage to this sort of deal, the key is to make a diary note to review it again before the discounted rate comes to an end and you revert to an SVR," Mr Hollingworth says.
Annual interest repayments on a £100,000 standard variable rate mortgage with the top 35 lenders
LenderTotal interest
Egg£5,119.45
Nationwide BS£5,139.31
HSBC£5,152.06
Intelligent Finance£5,240.42
West Bromwich BS (borrowers of 5 yrs & more)£5,395.20
Cheshire BS (borrowers of 5 yrs & more)£5,507.31
Standard Life Bank£5,550.81
Skipton BS (borrowers of 4 yrs & more)£5,603.69
Direct Line£5,609.32
Coventry BS (borrowers of 61 months & more)£5,724.87
Yorkshire BS£5,759.73
Newcastle BS (borrowers of 5 yrs & more)£5,774.11
Skipton BS (borrowers of 2 yrs & more)£5,803.70
Principality BS£5,844.38
Britannia BS (borrowers over 10 years)£5,860.82
Northern Rock (borrowers of 7 yrs & more)£5,940.63
Portman BS£5,968.67
Cheshire BS (borrowers under 5 yrs)£6,007.31
Chelsea BS£6,022.33
Norwich & Peterborough BS£6,022.61
Derbyshire BS£6,028.14
Britannia BS (borrowers 5 to 10 yrs)£6,060.82
Leeds & Holbeck BS£6,093.94
Skipton BS (borrowers under 2 yrs)£6,103.69
Mortgage Express (at 95%)£6,136.98
Halifax£6,149.31
West Bromwich BS (borrowers under 5yrs)£6,162.06
Bank of Scotland Mortgages£6,165.62
Coventry BS (borrowers under 61 months)£6,170.55
Northern Rock (borrowers under 7 yrs)£6,213.23
The Mortgage Business£6,232.33
Britannia BS (borrowers under 5 yrs)£6,260.83
Bradford & Bingley£6,266.44
Clydesdale Bank£6,268.99
Yorkshire Bank£6,268.99
Newcastle BS (borrowers under 5 yrs)£6,270.14
NatWest Mortgage Services£6,270.33
Barclays Bank£6,273.83
Woolwich£6,273.83
Royal Bank of Scotland£6,275.12
Bank of Ireland Mortgages£6,278.50
Bristol & West£6,280.14
Cheltenham & Gloucester£6,294.39
Alliance & Leicester£6,294.41
Abbey National£6,394.38
Source: Moneyfacts - figures projected to 30.6.02
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