Lloyds Bank knocked off the top of the list
First Direct and HSBC were the cheapest mortgage lenders in the UK in May, according to analysis of Moneyfacts data by consumer group Which?, ending Lloyds Bank's run at the top of the rankings.
Both lenders scored 98% in Which?'s analysis of 24 mortgage scenarios covering first-time buyers, home movers and remortgagers. A score of 100% reflects a market-leading deal based on typical borrower scenarios.
| Mortgage lender scores | ||
|---|---|---|
| Lender | Customer score | Overall score |
| First Direct | 73% | 98% |
| HSBC | 73% | 98% |
| Lloyds Bank | 74% | 97% |
| Nationwide Building Society | 80% | 97% |
| Santander | 73% | 96% |
| Virgin Money | 74% | 96% |
| TSB | 74% | 96% |
| Source: Which? analysis of Moneyfacts data | ||
HSBC recorded the more significant improvement of the two. In April, five lenders had outperformed First Direct and 13 had outperformed HSBC. For the typical borrower, the two lenders were £146 per year cheaper than their nearest rivals, Nationwide Building Society and Lloyds Bank, both of which scored 97%. TSB recorded the largest month-on-month score increase, rising nine percentage points to 96%.
Among first-time buyers, Marsden Building Society was identified as the cheapest lender, at approximately £150 per year less than the next best option. However, Marsden does not feature in the overall ranking because it does not offer products in the home mover or remortgage categories.
Beverley Building Society also appeared among the cheapest options for first-time buyers, though its products are restricted to applicants within 50 miles of Beverley. Lloyds Bank was the most competitive of the major high street lenders in this category.
"First-time buyers are generally considered riskier borrowers because they often have smaller deposits and larger loans, so you sometimes see a variety of smaller lenders in the table," said Which? market analyst Anna McClean (pictured right).
HSBC led the home mover segment with a score of 99%, representing a saving of £138 per year over the next-best major lender, Lloyds Bank.
"Our research continues to show that the largest lenders often offer the cheapest deals for typical home movers," McClean noted.
The remortgage segment showed the highest level of competition across lenders. First Direct and HSBC again led with scores of 99%, followed closely by two further lenders on 98%.
"This is good news for borrowers because, even during market turmoil, multiple lenders offer close to the best deals: 13 providers achieved a score of at least 94%," McClean said.
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