Top Big Six Mortgage Lenders in the UK: Your Guide to Navigating the Market

When searching for a mortgage in the UK, you will likely come across the "Big Six" lenders who dominate the landscape with a combined market share of over 70%, according to UK Finance.¹

Who are the Big Six and what are their market shares?

The Big Six hold the most significant UK mortgage market share in terms of the gross value of annual lending. Lloyds Banking Group leads with a 16.8% share (£52.7 billion), followed by NatWest Group at 13.2% (£41.5 billion) and Nationwide Building Society at 12.1% (£37.8 billion). Santander UK, Barclays and HSBC Bank follow with 11.4% (£35.7 billion), 9.5% (£29.7 billion), and 8.8% (£27.5 billion), respectively. The total for the top six is 71.7% (£224.9 billion).

Beyond market share based on the gross value of annual lending, the Big Six also lead in terms of the total value of mortgages outstanding. Lloyds Banking Group leads with a 19% share (£309.5 billion), followed by Nationwide Building Society at 12.5% (£203.6 billion) and NatWest Group at 11.5% (£186.8 billion). Santander UK, Barclays and HSBC Bank follow closely with 11.3% (£184.1 billion), 9.9% (£161 billion), and 7.5% (£121.6 billion), respectively. The total for the top six is 71.7% (£1,166.96 billion).

These lenders offer a range of mortgage products tailored to different borrower needs. When selecting a lender, comparing interest rates, arrangement fees and other product features, such as early repayment charges and overpayment limits, is essential. Additionally, consider the unique selling points of each lender, such as their customer service reputation and speed of mortgage approval, which can vary. It is important to review each lender's offerings and how they align with your financial goals before deciding.

Key Product Offerings and Features  

While specific mortgage products differ between lenders, they generally provide options such as 2-, 3-, 5-, 7- and 10-year fixed rates and tracker rates for loan-to-value ratios of 60%, 70%, 80% and 90%, and repayment and interest only mortgages. Most also offer 95% loan-to-value products for first-time buyers with limited deposits. Market-leading customer service and online application capabilities give these dominant lenders an edge.  

Unpacking the Big Six

Comparing Interest Rates and Fees

Interest rates currently average around 5.3%-5.7% for 2- to 5-year fixed-rate repayment mortgages with a 75% loan-to-value ratio. While relatively minor variations exist between lenders, the most prominent banks often secure cheaper funding from deposits and the financial markets. Approval criteria, such as income, affordability and credit rating, also impact the rates offered to borrowers. Upfront fees, if applicable, can range between £1,000 and £1,500.  

User Reviews and Customer Satisfaction

Santander has been recognized for its innovation in digital banking, notably being named the Most Innovative Bank in the world by The Banker magazine.² This award was given for Santander's successful deployment of its digital cloud-native core banking platform, Gravity, which has significantly transformed its banking services. Gravity's worldwide implementation aims to fully digitalize the bank's operations, enhancing customer experience, products and services through real-time analytics and frequent app updates. This initiative has allowed Santander to migrate more than 90% of its IT infrastructure to the cloud, achieving easier and faster access to data, simplifying processes, and enabling new customer capabilities in significantly reduced timeframes. Additionally, this transformation contributes to significant efficiencies and savings, including a 70% reduction in the bank's energy consumption by its IT infrastructure.

Lloyds Banking Group has been recognized for its excellence and innovation across various facets, highlighting its leadership in the UK banking sector. In 2023, it was named the Best Bank in the UK by Euromoney, showcasing its strategic focus beyond cost discipline and scale efficiencies towards investing in growth and enhancing services for its customer base.³

NatWest Group has been acknowledged for its excellence in the financial industry through various awards and recognitions in 2023. It has demonstrated a solid commitment to innovation, particularly in AI and digital banking enhancements, to improve customer experience. Notably, NatWest collaborated with IBM on a generative AI initiative to enhance the capabilities of its virtual assistant, Cora, making it one of the first banks in the UK to deploy generative AI for a safer, intuitive and accessible digital banking experience. This collaboration aims to provide customers access to a broader range of information through conversational interactions, emphasizing the bank's focus on using responsible and ethical AI to support financial well-being.⁴ 

HSBC launched HSBC Innovation Banking at London Tech Week, integrating the former Silicon Valley Bank UK and forming innovation teams in the US, Israel and Hong Kong. This move aims to deliver a globally connected specialized banking proposition.⁵

Beyond the Six: Exploring Alternatives 

Online Mortgage Comparison Sites and Mortgage Brokers

Online mortgage comparison sites such as comparethemarket, moneysupermarket and moneysavingexpert provide competitive offerings with access to a wide range of lenders. Mortgage brokers such as Habito, L&C Mortgages, Better.co.uk and John Charcoal also provide flexibility and choice.  

Building Societies and Smaller Players

Local building societies and small lenders highlight personal service and community connections. With lower overheads than megabanks, some, like Skipton Building Society, can offer lower rates.

Making Your Choice: Deciding the Right Lender for You 

The various factors outlines above should guide your mortgage lender selection. Tuning out the hype lets you confidently determine the right mortgage provider to meet your needs. Getting mortgage advisors in your corner also ensures the lender suits your financial situation and plans.  

FAQs:

Q. What are the key differences between the "Big Six" mortgage lenders? 

A: The "Big Six" differ in market share, portfolio sizes, target audiences, product specialties, customer service models and digital vs traditional offerings. But they provide similar mainstream mortgage types.

Q. Which lender is best for first-time buyers?

A: Halifax is among the best for first-time buyers based on low deposit options, family assistance programs and partnerships with government schemes.

Q. How do I compare mortgage deals from different lenders?

A: Use mortgage comparison sites to easily view multiple lenders' rates and fees side-by-side for the exact deal specifics, like term lengths. This allows accurate comparisons. Also consider using mortgage brokers.

Q. What are the advantages and disadvantages of online mortgage lenders?

A: Online lenders provide speed, nimble service, and smooth user experiences, but you may need more human interaction and advice. Traditional banks offer personal guidance, but slower turnaround.

References:

1. 2023 Largest lenders table for the total mortgage market (table MM10) | UK Finance, Data | Released on: 2023

2. Press release: Santander named Most Innovative Bank in the world by The Banker magazine | Santander | Released on: 01 Sep 2023

3. Awards for Excellence 2023: Best Bank in the UK | Euromoney | Released on: 13 Jul 2023

4. NatWest and IBM Collaborate on Generative AI Initiative to Enhance Customer Experience | Newsroom IBM | Released on: 06 Nov 2023

5. HSBC Innovation Banking launches at London Tech Week | HSBC | Released on : 12 Jun 2023