Bradford & Bingley members can take the windfall and run

Borrowers may do better elsewhere

Bradford & Bingley members know from recent experience that windfalls aren't what they used to be. As the former building society started trading on the stock market last week, some three million members received windfall shares worth about £600 - a far cry from the estimated £1,000 forecast by optimistic carpetbaggers, and far lower than payouts received by members of other former building societies.

Bradford & Bingley members know from recent experience that windfalls aren't what they used to be. As the former building society started trading on the stock market last week, some three million members received windfall shares worth about £600 - a far cry from the estimated £1,000 forecast by optimistic carpetbaggers, and far lower than payouts received by members of other former building societies.

So those members who have hung on to savings accounts and mortgages to qualify for a windfall will be less than pleased. Chief executive Christopher Rodrigues shrugged off the low flotation price, blaming it on the fact that the FTSE 100 has fallen since the beginning of the year when the price was set.

But now members have got their windfalls, however small, they can think about switching savings accounts and mortgages to providers offering better rates.

David Hollingworth, mortgage specialist at brokers London & Country, says a number of his clients who held on for windfalls are assessing whether to move. He points out that B&B borrowers with a £100,000 mortgage at the standard variable rate (SVR) - currently 7.64 per cent - would save £2,090 in the first year if they switched to a Halifax tracker mortgage, which currently has a rate of 5.55 per cent. This is 0.45 per cent below the Bank of England base rate until 31 December 2002, with no fees or penalties for early redemption.

"Now they have got their windfalls, customers are able to move," he says. "Anyone on an SVR should be looking to move to another deal anyway, whether [they are] a B&B customer or not."

Mortgage customers looking for a flexible loan will need to move as well, since B&B does not provide this option. Alliance & Leicester is offering a flexible loan that allows overpayments. This has a 2.5 per cent discount for the first year, giving a payable rate of 5.24 per cent. It then moves on to 0.95 per cent above the base rate for 10 years. There are redemption penalties in the first year, but no arrangement fees.

B&B is trying to stem the tide of departing customers by relaunching itself as an independent mortgage advisory service. After buying mortgage broker Charcol earlier this year, the lender is rebranding a number of its 600 branches as "Marketplace at Bradford & Bingley", where customers will be able to access mortgage and insurance brokerage services. So from February, customers entering a B&B branch for mortgage advice may end up with a Halifax or Woolwich loan.

Customers, who do not have to be with B&B, will pay a £200 charge for this service on loans under £50,000 or £400 for loans over £50,000. B&B gets a fee from the lender whose business it recommends.

"It means we will be offering more than 500 mortgages," says Chris Holland, corporate affairs manager at B&B. "We will no longer exclusively be offering our own mortgages. Like all lenders we want to retain as many of our borrowers as we can, but this service will broaden our range of services."

Ray Boulger, technical manager at Charcol, says the new service means that B&B customers should not automatically consider moving, particularly if they will incur huge redemption penalties for doing so.

"If [a customer] has a mortgage with redemption penalties and wants to move, B&B is offering a very competitive tracker rate so you avoid paying the penalty and get the additional bonus of a favourable rate," he says. "For those without redemption penalties, B&B is offering reasonable deals, looking at each customer on their own merit."

He points to B&B's fixed rate of 5.99 per cent until 1 December 2005, although this carries penalties for early redemption on a reducing basis over the five years. But it is not that much more expensive than the cheapest deals on the market - Bristol & West's 5.55 per cent fixed for five years on loans above £100,000, or Portman Building Society's 5.99 per cent.

While B&B focuses its attention on mortgage business, savers risk languishing in poor-paying accounts. Most savers can get better rates elsewhere. B&B pays 2.05 per cent on its instant access First Choice account for balances of £500, but Nationwide pays 6.7 per cent on balances of £1 in its e-Savings account, available only over the internet. If you prefer not to use the net, Northern Rock's Base Rate Tracker, a post and telephone account, pays 6 per cent interest and requires no notice on withdrawals.

* Contacts: Alliance & Leicester, 0845 300 4004; B&B, 0845 600 8885; Bristol & West, 0845 300 8000; Halifax, 0800 203049; Nationwide, www.nationwide.co.uk; Portman, 01202 563502.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Marketing Services Manager - (communications, testing, DM)

    £32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

    Guru Careers: Finance Account Manager

    £Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

    Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

    £45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

    Day In a Page

    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas
    La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

    Deaf community outraged by La Famille Bélier

    The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
    10 best high-end laptops

    10 best high-end laptops

    From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

    The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
    Susie Wolff: A driving force in battle for equality behind the wheel

    Susie Wolff: A driving force in battle for equality behind the wheel

    The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
    Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

    'No abs Adam' plans to muscle in on Usain Bolt's turf

    After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
    Calls for a military mental health 'quality mark'

    Homeless Veterans campaign

    Expert calls for military mental health 'quality mark'
    Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

    Meet Racton Man

    Analysis shows famous skeleton was a 6ft Bronze Age superman
    Garden Bridge: St Paul’s adds to £175m project’s troubled waters

    Garden Bridge

    St Paul’s adds to £175m project’s troubled waters
    Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

    Stuff your own Christmas mouse ornament

    An evening class in taxidermy with a festive feel
    Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

    Joint Enterprise

    The legal doctrine which critics say has caused hundreds of miscarriages of justice
    Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

    Freud and Eros

    Love, Lust and Longing at the Freud Museum