Mortgage-holders head for the banks

December 03, 2001

THE ''Mutuality Gap'' - the difference between the mortgage variable rates offered by building societies and banks - is a thing of the past, according to the Halifax.

The former mutual's head of mortgages, Paul Duffin, says the trend has been reversed, with the result that customers with mutuals are now paying over the odds compared to borrowers with plcs.

''Borrowers are voting with their feet and leaving the building societies in substantial numbers,'' he claimed.

''The latest mortgage lending figures from the Building Societies Association, the British Bankers Association and the Council of Mortgage Lenders, reveal that since the beginning of this year, the building societies' share of net lending has dropped from 23.1 to 9.7 per cent,'' said Duffin.

''In contrast, over the same period, the banks' share of net lending has increased significantly.

''Hundreds of thousands of borrowers with variable rate mortgages with the UK's ten biggest building societies are currently paying on average 0.57 per cent more than they could be compared to the Halifax.''

During November, the average variable base rate from the ten biggest building societies has been 6.07 per cent, compared to Halifax's 5.50 per cent.

Thousands of Halifax borrowers, however, remain on the higher rate of 6.25 per cent, although the ex-mutual says any existing borrower who is not already tied in to a special deal is free to move across to the 5.50 per cent rate straight away, and is being actively encouraged to do so. Halifax further claims that 62 of the 66 building societies - including nine of the ten biggest - now have a variable rate higher than its own.

• Skipton BS has a new two-Year fixed rate mortgage at 4.39 per cent until March 2004. The society's concessionary discount scheme applies a 0.3 per cent discount to the variable rate (currently 5.70 per cent) after two full years, rising to a total 0.5 per cent after four full years. Skipton's Mark Smitheringale said now was arguably the best time in 40 years to lock into the low-interest environment, knowing the rate will not alter until 2004. Further details: 0800 446776.