Chancellor Warning On Mortgage Fees
Chancellor Alistair Darling has met with the CML to encourage mortgage lenders to keep arrangement fees down. He wants to ensure that people are getting a fair deal. Meanwhile, Halifax and Lloyds TSB have increased mortgage rates again.
Mortgage lenders have been told by the Chancellor not to charge borrowers huge arrangement fees.
Alistair Darling said yesterday that he is talking to the Financial Services Authority about the level of charges that are justifiable.
He said that he was very concerned about people being treated fairly, especially those coming off fixed rates and going onto new, higher interest rates for their mortgages. He said that he had met with the Council of Mortgage Lenders (CML) to discuss fair treatment for borrowers. If it didn’t materialise he would talk to the FSA. Although he understood that there were costs that needed to be covered for a mortgage switch, he wanted people not to be taken advantage of.
Charges used to be around £400 for a mortgage arrangement fee, but these have reached £1,000 in most cases, and can be in the region of £2,500 for people with poor credit history. Mortgage lenders keep their headline interest rates down, but load the fees instead.
The CML said that there were a wide range of mortgages for borrowers to choose from, including many without fees. Lower fees usually mean higher interest rates and vice-versa. The key thing to understand, said the CML, was the overall cost of the mortgage, taking all costs into account.
Meanwhile, two large mortgage lenders increased their rates.
Halifax put half of its fixed-rate mortgage products up by 0.5% and some trackers up by 0.3%. Lloyds TSB put its fixed rate deals up by 0.3%. Lloyds’ two-year fixed rates are now 6.44% for those needing a loan-to-value (LTV) up to 75%, and 6.75% for those needing LTV up to 90%.
Halifax said the cost of borrowing money was still rising, and other lenders had also had to raise rates in recent weeks. The extra cost of borrowing money had to be passed onto customers, they said.
