What does Yorkshire Building Society buying Egg mean for you?

eggs in basketYorkshire building society is to buy Egg's £430 million mortgage book and £2.5 billion savings business from Citigroup, which has already sold the Egg cards business to Barclays.

More than half a million Britons with savings accounts and mortgages with Egg are set to become customers of Yorkshire Building Society by the end of the year as a result. So what does the deal mean for them and the Yorkshire members they are due to join?
Egg savers
Egg is currently offering just one instant-access internet savings account paying a measly 0.6% (before tax).

Savers in this account could therefore do much better by moving to Yorkshire's current easy-access offering paying 2.1% (before tax) – although they can still find more generous deals elsewhere.

And this could prove doubly sensible as, once the deal goes through later this year, those with savings with Yorkshire and Egg will qualify for just one Financial Services Compensation Scheme (FSCS) limit of £85,000 - or £170,000 for joint account holders - for all their accounts.
What's more, Yorkshire has confirmed that savers will be able to move any balances above this limit penalty-free once the takeovers have gone through.

Kevin Mountford, head of banking at comparison website Moneysupermarket, said: "This acquisition is good news for Egg customers, who will now be part of one of the country's largest Building Societies, giving them a higher degree of financial security.

"However, savers should use this as an opportunity to ensure they are getting the best rates available."

Egg borrowers
The situation is currently much less clear-cut for Egg's borrowers, particularly as the bank no longer markets mortgages and Yorkshire is not planning to actively promote the Egg brand. Outgoing Yorkshire chief executive Iain Cornish said: "We will make sure there is continuity, but for new business the Egg name does not have the same resonance that it did."

Potential benefits of the takeover include that those who have fallen into negative equity may be able to switch to a new deal with Yorkshire, which offers some 100% plus loans for existing customers.

However, Yorkshire's deals for new customers tend to be more competitive, meaning that Egg borrowers looking to switch could miss out on market-leading rates.

Yorkshire savers
As described above, savers with accounts with both Yorkshire and Egg will have to check that the total balances do not exceed £85,000 – or £170,000 for joint accounts – if they want to continue benefiting from full FSCS protection.

The same is true of anyone with accounts with both Yorkshire and Norwich & Peterborough building society, with which Yorkshire is hoping to merge.

Yorkshire borrowers
Yorkshire has dominated the mortgage best buy tables in recent months, and the further injection of funds provided by the acquisition of Egg should only serve to increase its lending power.

However, while Yorkshire's expansion should enable it to offer better deals, its run of acquisitions has reduced the overall number of players in the marketplace.

David Hollingworth of mortgage broker London & Country said: "There has also been major consolidation in the banking sector, which means there are now less brands for consumers to choose between."

As mentioned above, the best deals are also likely to be reserved for new customers.
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