Comparative analysis indicates that building societies generally offer more competitive rates than high street banks for first-time buyers, particularly in two- and five-year fixed mortgages at both 90% and 95% loan-to-value ratios.
While the seven largest high street banks – Barclays, Halifax, HSBC, Lloyds Bank, NatWest, RBS, and Santander – typically provide lower average rates, these might not represent the best value when considering all associated costs and incentives, Moneyfacts said.
“Building societies offer competitive packages for first-time buyers and continue to support those who are the life blood of the mortgage market,” commented Rachel Springall (pictured left), finance expert at Moneyfactscompare.co.uk. “Mutuals which offer two- or five-year fixed rate deals available to first-time buyers with a 5% or 10% deposit currently charge less on average compared to the market average in the same space.
“However, the biggest high street banks offer some of the lowest fixed rates in the same sectors, and indeed seven banks are priced lower, on average, than mutuals. High street banks traditionally have more margin to price their mortgages lower, but the lowest rate deal may not be the best choice when all the costs and incentives associated with the mortgage are included.