The home loan heroes

Egg, HSBC and Standard Life Bank came out top in a new survey this week looking at which mortgage lenders offer the best value when it comes to borrowers who are paying their standard variable rates.

The regular survey from financial data provider Moneyfacts is seen as a good indicator of which lenders play fair over the medium and long term because it focuses on what people on the standard rate pay, rather than those borrowers on loss leader special rate deals.

Moneyfacts analysed the UK's top 35 mortgage lenders and looked at the total interest someone with a £50,000 standard variable rate mortgage would have forked out over the past year - from July 1 last year until today. It also shows the comparative figures for 2000 and 1999.

Over one year, online bank Egg came out cheapest with a total annual interest bill of £3,280. This is £535 less than the £3,815 an equivalent borrower with Northern Rock would have paid out.

In second and third place were HSBC (£3,404) and Standard Life Bank (£3,405), while as usual the building societies put in a good showing. Cheshire building society came fourth with an interest bill for the year of £3,430, though if you'd been with the society for less than five years you would have paid out slightly more. Nationwide came fifth.

The big banks were way down the table - Halifax was fifth from the bottom, with only Bristol & West, Woolwich, Bank of Ireland Mortgages and Northern Rock below it.

Over three years, excluding loyalty rates, Direct Line came out cheapest with a bill for the period of £10,521, which means a £50,000 standard variable rate borrower with them would have been £967 better off than an equivalent borrower with Northern Rock.

However, it is only fair to mention that if the Northern Rock borrower had been with the bank for seven years or more, he or she would have become eligible for their loyalty rate and the differential would have been smaller (£580).

Once loyalty rates are taken into account, Coventry building society comes out best over three years (a bill of £10,391). Coventry offers a lower loyalty rate to borrowers who have been members of the society for 61 months or more.

Melanie Stewart at Moneyfacts says several lenders have now ditched their traditional standard variable rate pricing policies, with players such as Egg and HSBC now running their businesses in a way that seems to be aimed at looking after existing borrowers rather than chasing new business with headline rates.

She points out that Nationwide automatically transferred many of its existing borrowers on to its new lower "base mortgage rate" but adds that others - including the Halifax - are leaving the onus on the customer.

"This could be costing them dear. For example, if a Halifax borrower had been transferred to the new low rate automatically they would have seen a [typical] saving of £125.34 in four months, which is potentially £9,400 over 25 years. Don't wait to be asked - check if your lender offers a lower rate today."

Egg says it is "delighted to be recognised as consistently providing value for money mortgages," while Direct Line says this is the sixth time in a row that it has been recognised by Moneyfacts as best value mortgage lender over three years, excluding loyalty rates.