First direct, Direct Line and HSBC led the pack in offering the cheapest Standard Variable Rate mortgages during 2008. In the mutual sector the Nationwide and the Skipton Building Societies were the cheapest and occupy fourth and fifth places respectively according to Defaqto's annual survey of the largest lenders.
The research was based on the amount of gross interest payable during 2008 on a £100,000 interest-only mortgage provided by the top lenders, as defined by the Council of Mortgage Lenders for 2007. In order to provide a level playing field for comparisons, specialised providers were not included.
Standard Variable Rate borrowers with First direct paid £5,918.16 in 2008, which was an astonishing £1,468.42 cheaper than the most expensive standard variable rate deal.
Commenting on the results, David Black, Principal Consultant of Banking at Defaqto said, "The recent turmoil in the financial markets has meant that Standard Variable Rates have taken on a much greater significance than in previous years as the availability of attractive remortgage deals for many borrowers has been in short supply. This is particularly the case for those with high Loan-to-Values as the best new deals tend to be restricted to those seeking mortgages for no more than 60% Loan-to-Value."
Lender - Interest cost - Difference from lowest
First direct - £5,918.16 - £0.00
Direct Line 1 - £6,180.14 - £261.98
HSBC - £6,322.27 - £404.11
Nationwide BS - £6,435.07 - £516.91
Skipton BS - £6,540.55 - £622.39
West Bromwich BS (loyalty rate) 2 - £6,673.56 - £755.40
Britannia BS - £6,740.00 - £821.84
Coventry BS (loyalty rate) 2 - £6,809.29 - £891.13
Intelligent Finance (OVR) 3 - £6,835.62 - £917.46
Intelligent Finance (SVR) - £6,868.22 - £950.06
Yorkshire BS - £6,877.56 - £959.40
Halifax - £6,911.64 - £993.48
C&G (LloydsTSB) - £6,911.64 - £993.48
The Co-operative Bank - £6,922.88 - £1,004.72
Derbyshire BS - £6,979.18 - £1,061.02
GMAC-RFC - £6,984.00 - £1,065.84
Norwich and Peterborough BS - £6,988.05 - £1,069.89
Bristol & West - £7,035.62 - £1,117.46
Coventry BS - £7,043.42 - £1,125.26
Standard Life Bank (90% LTV) - £7,044.38 - £1,126.22
Clydesdale Bank - £7,051.23 - £1,133.07
Yorkshire Bank - £7,051.23 - £1,133.07
Abbey - £7,060.14 - £1,141.98
Principality BS - £7,061.64 - £1,143.48
Leeds BS - £7,085.34 - £1,167.18
NatWest - £7,104.38 - £1,186.22
Royal Bank of Scotland - £7,104.38 - £1,186.22
West Bromwich BS - £7,106.44 - £1,188.28
Bradford & Bingley - £7,112.60 - £1,194.44
Northern Rock (loyalty rate) 4 - £7,136.58 - £1,218.42
Cheshire BS - £7,144.79 - £1,226.63
Woolwich (Barclays) - £7,179.04 - £1,260.88
Alliance & Leicester - £7,183.01 - £1,264.85
Standard Life Bank (95% LTV) - £7,244.38 - £1,326.22
Bank of Scotland - £7,261.64 - £1,343.48
Chelsea BS - £7,314.79 - £1,396.63
BM Solutions - £7,351.64 - £1,433.48
Northern Rock - £7,386.58 - £1,468.42
1 Direct Line figure based on mortgage taken out on or after 1st November 2004; the figure for mortgage taken out prior to that date is £6,539.59
2 Loyalty rate applies to existing mortgage borrowers of 5 years or more standing.
3 OVR is Offset Variable Rate
4 Loyalty rate applies to existing mortgage borrowers of 7 years or more standing.
Note: GE Money Home Lending, Paragon Mortgages, Lehman Bros, Kensington and CHL Mortgages are top CML lenders but are not included in the table.
