Moneywise Mortgage Awards 2011: Winners

It's been a rough few years for the mortgage market.

The credit crunch has hit the industry hard and would-be homeowners and those wanting to move home are the ones who have lost out. Many lenders pulled in their belts and ran for cover, leaving many people looking to finance a home purchase facing an uphill struggle.

Even now, with the UK officially out of recession, albeit still suffering from aftershocks, recovery in the housing market is uncertain. Gross lending for the first quarter of 2011 was £30.1 billion, an 11% fall from the fourth quarter of 2010 and just 1% up on the first quarter of 2010.

But not all lenders have shied away from the task, and the Moneywise Mortgage Awards 2011 serve to honour those that have risen to the lending challenge, as well as pointing you, the customer, in the direction of the best deals.

Our panel of experts has looked at the charges, customer service and extras that the best mortgage products offer, helping you find the best deal for your circumstances.


WINNER - Yorkshire Building Society

Since the Bank of England base rate hit a record low of 0.5% in March 2009, homeowners on a variable-rate mortgage have been enjoying historically low repayments, while anyone on a fixed rate has been left kicking themselves.

However, this could soon be changing. If the experts are right and interest rates rise this year, borrowers now on tracker rates will start looking more favourably on the fixed-rate market.

This category looks at which lenders have managed to offer competitive and creative fixed-rate products even throughout the tracker heyday.

This year's winner, Yorkshire Building Society, has continued to offer high loan to value (LTV) products with aggressive pricing at a time when many lenders have played it safe around the 75% LTV mark.

"Yorkshire has market-leading rates and low fees, and offers competitive rates at higher LTVs - all-in-all, an unbeatable combination," says Melanie Bien, director at Private Finance.

This year's runners-up are HSBC and ING Direct. ING Direct was praised for having an "easy online process", while HSBC was credited for its "consistently good pricing".


HIGHLY COMMENDED - Coventry Building Society

At a time when austerity is the name of the game, the word 'discount' is sure to get everybody's attention. With a discount mortgage, the homeowner pays a rate set a specified amount below the lender's standard variable rate (SVR). This discount applies for a set number of years before the rate reverts to the SVR.

Discount mortgages have been around for some time, but the number of products available has increased over the last couple of years, and this is thanks in no small part to this year's winner, ING Direct.

"Discounted rates have increased in number to offer an alternative to tracker rates, and ING has been extremely well priced in both areas," says David Hollingworth, mortgage specialist at London & Country.

Andrew Montlake, director at brokerage Coreco, also praises ING Direct. He says it has "very competitive pricing and some excellent products. The no-penalty lifetime trackers are excellent."

Highly commended in this category was Coventry Building Society. "Coventry has offered very competitive lifetime rates for most of the year, and is one of the few lenders to offer early repayment charge-free rates, which are also flexible," says Ray Boulger, senior technical manager at John Charcol.


WINNER - Yorkshire Building Society
HIGHLY COMMENDED - First Direct, Clydesdale

Savings rates are still pitiful, given the rock-bottom interest rate. Because of this, savers are looking to find alternative ways to make their money work for them.

An increasingly popular option is to offset your savings with that provider against your mortgage. This means you only pay interest on the mortgage, minus your savings - however, you sacrifice interest on those savings in return.

Last year, Yorkshire Building Society was pipped at the post for first prize in this category and had to settle for second spot, but this year the society comes out on top.

"Yorkshire is a lender that's clearly committed to offsets, with dozens to choose from on a fixed and tracker basis," says Bien. "Pricing is good and there is a range of LTVs and fees to suit all customers."

Boulger agrees. He says it's one of the few lenders to offer offsets on fixed rates, including some as long as five years, and it only charges a small premium over its non-offset fixed rates.

Last year's winner - First Direct - was highly commended this year. "Now an established player in the offset market, First Direct offers good flexibility and the ability to offset current account and savings accounts," says Hollingworth.

First Direct shares the runner-up spot with Clydesdale Bank, which Montlake says has shown consistency in terms of product pricing and good service standards.



WINNER - Coventry Building Society
HIGHLY COMMENDED - The Mortgage Works

The buy-to-let market is making something of a comeback. In the first three months of 2011, the number of buy-to-let products almost doubled on the same time period last year, according to research by Mortgages for Business.

The market took a battering as lenders withdrew from the buy-to-let sector, but with first-time buyers struggling to get on the property ladder, residential landlords are more in demand than ever.

The lenders in our buy-to-let category all worked hard to maintain a presence in the buy-to-let arena. This year's winner, Coventry Building Society, had a particularly good year, and this deserves to be recognised, according to Hollingworth.

"Coventry has performed well in the buy-to-let market and offers value and something different by charging flat fees rather than percentage fees," he adds.

The Mortgage Works took the runner-up slot, winning praise for its consistent support to the buy-to-let market.

"The Mortgage Works has exceptional products and service," says Montlake. "The provider's ability to lend to houses of multiple occupancy and limited companies, and its light-refurbishment product, means that it's able to cover the full range of investors."


WINNER - Woolwich

Flexible mortgages have come into their own as a result of the uncertainty in the economy. The ability this type of mortgage offers to defer payments or make underpayments has been vital to to hard-pressed homeowners as job losses and pay cuts have taken hold.

Meanwhile, with interest rates so low, the opportunity to overpay on a mortgage without facing early repayment charges has meant that many flexible mortgage holders have been able to make a considerable dent in their debt.

This year's winner, Woolwich, has come a long way as a lender over the past few years, with some exceptional products, a good underwriting team and great service, says Montlake. "The flexible offset mortgage has been a consistently good product," he adds.

First Direct was highly commended in this category. "First Direct has long been one of the trailblazers when it comes to flexibility," says Bien. "It also offers excellent current account facilities, making it a really attractive offering to borrowers."


WINNER - The Post Office
HIGHLY COMMENDED - Royal Bank of Scotland

Life is still tough for the first-time buyer. According to a report by Safe Home Income Plans (SHIP), the UK's trade body for equity release product providers, the average first-time buyer now has to pay 558% more for their first home compared with their parents' generation.

But some lenders have been fighting for the corner of would-be buyers by launching competitive and, more importantly, obtainable deals. This year's winner is the Post Office.

"Although it's not a brand immediately associated with mortgages, the Post Office has consistently supported the high loan-to-value end of the market with very competitive rates," says Hollingworth.

Royal Bank of Scotland was highly commended.


HIGHLY COMMENDED - ING Direct, First Direct

The last few years have seen some of the most competitive tracker rates in history. With base rate currently at 0.5%, the average two-year tracker rate in the first quarter of this year fell to 3.4%, according to Moneyfacts.

Although tracker mortgages offer little security, the low base-rate environment has made this type of mortgage increasingly attractive to borrowers.

This year's winner, HSBC, has had market-leading rates in lifetime mortgages for some time now, and shows no sign of flagging. "HSBC's maximum loan-to-value is low but its rate and fees, plus the lack of early repayment charges, mean it's hard to beat," says Bien.

ING was highly commended for "consistently offering competitive lifetime trackers", while First Direct shared the place of runner-up. "Adding some lower rates on a repayment basis only went to enhance its already attractive range of lifetime trackers," says Hollingworth.


HIGHLY COMMENDED - Coventry Building Society

Some experts have predicted a steep rise in rates over the next few months. The Policy Exchange warned interest rates could rise to a massive 8% by 2012 if inflation spirals out of control. Remortgaging, then, is looking like an increasingly good option for many borrowers.

This year's winner, ING Direct, is noted for its flexibility on fees. "Coupling competitive rates with attractive fee options is what ING Direct is all about and it delivers across fixed and variable-rate ranges," says Hollingworth.

The runner-up was Yorkshire Building Society.


WINNER - Coventry Building Society
HIGHLY COMMENDED - The Mortgage Works

The mortgage market relies on innovation. From offset deals to flexible remortgages, innovation has driven the sector into the 21st century, and this year's winner, Coventry Building Society, has been a leader in innovation.

"This is one of the very few lenders to offer capped rates, coupled with a wide range of early repayment charge-free and flexible deals," says Boulger. Montlake calls it an "all-round excellent lender that's always open to improving its criteria".

This year's runner-up was The Mortgage Works. "This provider has managed to apply a fresh approach when looking at its mortgage range," says Hollingworth.

The Judges

* Ray Boulger, senior technical director at mortgage broker John Charcol
* David Hollingworth, mortgage specialist at 
broker London & Country
* Melanie Bien, director at mortgage broker Private Finance
* Andrew Montlake, director at mortgage broker Coreco


Using data from London & Country's best buy tables for the last 12 months, we drew up shortlists for each category, based on the providers that consistently offered the most competitive rates.

These shortlists were passed on to the panel of judges who were asked to select their winners and runners-up in each category, based not only on the rate but also on fees, penalties, lending flexibility, service standards and the treatment of existing and new customers, the relationship between bank base rate and providers' standard variable rate, and finally the value of any freebies, such as legal fees.