Lender fees under greater scrutiny

With many lenders having announced their half-year results, brokers have urged lenders to pass on the profits by reducing fees attached to mortgage products.

Ian Crampton, sales director at Ferndown Ltd, said: “More and more lenders are announcing massive profits every month. It’s my opinion that they treat every customer with absolute contempt. All of this money grabbing must be stamped out. The Financial Services Authority (FSA) should

start getting some lenders’ short arms digging a little deeper into their enormous pockets. Look at the evidence since ‘Mortgage Day’ – exit fees have increased, as well as arrangement and valuation costs. It is completely scandalous.”

A broker, who wished to remain anonymous, added his dissatisfaction with lenders arrangement fees. He said: “With an arrangement fee, borrowers are urged to pay it up front, rather than add it to the loan.

“The regulator tells lenders to ask for fees up front, but I don’t think this is a level playing field. If the case doesn’t go through, the lender, in some cases keeps the fee, which it would not have done if the fee was added to the loan.”

However, Paul Fincham, senior media relations officer at Halifax, said: “Most borrowers pay the arrangement fee on completion. If the case doesn’t complete because the transaction has fallen through, for example, we don’t charge the customer twice.”

Alex Hammond, PR manager at Kensington Mortgages, said the market would have to evolve. “Market forces dictate that borrowers want low headline rates. As rates have gone down, lenders margins have been cut.

“However if there are too many fees and they are not transparent then problems can arise. Higher lending charges (HLC) are one example of a fee that would be very hard to justify on the principles of ‘Treating Customers Fairly’ (TCF).”