After the U.S had its credit rating downgraded last week, it’s good to know that some of the UK’s building societies had their credit rating upgraded last week.
Moody’s, the credit rating agency, upgraded Nationwide, Principality and Yorkshire by two notches and the Coventry building society by one notch. It also upgraded the Newcastle and the Nottingham from a negative to a stable rating.
This should come as good news to contractor mortgage seekers who save with building societies as the vote of confidence will enable them to offer better mortgage rates. The better its debt score, the cheaper it becomes for a building society to borrow funds from the money market and pass the saving on to its members in the form of cheaper mortgages.
A Yorkshire Building Society spokesman said he was delighted that Moody’s had recognised the strong financial position of the Society and although specific details have not yet been finalised, this will have an impact on mortgage products.
The building societies are winning the mortgage war against the banks. The Leeds, Nationwide, Skipton and Yorkshire have been battling it out for supremacy and this has led to record low 3.39% fixed rate mortgage products over a five year term.
The Building Societies Association says this boost in ratings confirms that the sector is recovering from the economic crisis, but there are still challenges ahead. In order to provide mortgage finance, building societies have to encourage people to save more. They seem to be winning that war as well, providing better interest rates on instant access accounts than the big banks such as Barclays, HSBC, Lloyds and Santander.
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