High mortgage fees are slammed by MPs
Liberal Democrat MPs Steve Webb and Vince Cable have accused some mortgage lenders of “tricking” borrowers into taking out homeloans with very high arrangement fees.
The MPs have said that the fees are often levied on mortgages that offer low introductory interest rates, that seem to present a significant saving and investment for borrowers and which put the products at the top of consumer best buy tables.
They singled out Halifax’s 1.99% interest rate for a year, but a product that charged £1,999 as an upfront fee.
The Council of Mortgage Lenders denied its members were “tricking” consumers. Spokesperson Bernard Clarke said: “Deals with high arrangement fees may not suit everyone, but those borrowing large sums could find that a high fee is more than offset by the savings they make in interest payments.”
But Cable and Webb stuck to their guns. “Many consumers may be drawn to an advert by a low headline interest rate, but not fully appreciate that once account is taken of the astronomical arrangement fee, the product may not be good value for money.”
The Financial Services Authority (FSA) has been scrutinising mortgage fees since Autumn 2005, and is especially concerned at the imposition of exit fees when mortgages come to an end.