Bailed-out banks charge premium on fixed-rate mortgages

Bailed-out and nationalised lenders are on average 0.84% a month more expensive than the best on the market, the analysis shows. That equates to around £105 a month more on a £150,000 loan.

Average rates across best-buys for two, three and five-year fixes are currently 4.75% compared with the average across all products from the so-called Bank of Gordon of 5.59% – but that is just the average.

Best-buy borrowers can expect average rates of 4.06% on a two-year fix compared with 5.3% from Government owned/part-owned institutions – Northern Rock, RBS and Lloyds Banking Group including the former HBOS brands – which is a premium of 1.24%.

The situation on three year deals is slightly less dire. Best-buys currently average 5.11% compared against nationalised/part-nationalised 5.23% – for a difference of 0.3%.

When it comes to five year fixes however, the Bank of Gordon charges a 0.97% premium. Best-buy five year deals currently average 5.28% compared against nationalised/part-nationalised 6.25%.

Francis Ghiloni, Commercial Director at said: "It is clear that the nationalised banks are being selective about the business they want and don’t want.

"Nobody should expect them to lend crazily or in all circumstances but we can expect them to be competitive.

"There’s a strong suggestion that Gordon’s banks are deliberately pricing themselves out of the market on certain products, giving the impression that they are lending but actually being unlikely to be asked to."

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