Darling hits out at arrangement fees

Mortgage arrangement fees have increased month on month for over a year, and Chancellor Alistair Darling says enough is enough. With some lenders charging up to 3 per cent of the amount being borrowed, many feel that lenders are simply not treating their customers fairly. In a speech yesterday, Darling explained that everyone accepts there are costs that have to be met, but was keen to emphasis the importance of ensuring that people are treated fairly and not taken advantage of through no fault of their own.

In response, the Council of Mortgage Lenders came to the defence of its members, saying

"Different customers may have different preferences, for example, someone with a large mortgage may benefit from a higher upfront fee and lower monthly costs. What it is important to understand is the overall cost of the mortgage, which the key facts document provides. Customers continue to benefit from a good choice of mortgages, including hundreds of fee free deals, even in the current difficult conditions in the mortgage market. Constraining the market to offer products priced in only one way would be detrimental to customer choice.

It remains to be seen whether trading results from the major lenders support the view that such fees are necessary to avoid loss. Many believe that increased or even level profitability in the face of reduced lending volumes might indicate the contrary.

Related Articles

HomeBuy Direct offers housing hopeLenders make house price crash worseBanks Squeal Under Government PressureRate cuts have limited successTwo year fixed rates tumble