Under the final Mortgage Market Review rules published today customers who choose to roll their fees up during a “contract variation” or extension can do so on a non-advised basis.
Over a 25 year mortgage term this could see fees of £15,000 or more added to the capital loan if the borrower remortgages every two years and rolls up fees each time.
Robert Sinclair, chief executive of AMI, said: “When consumers want to review their existing arrangements the new rules and guidance do not go as far as AMI was hoping.
"Lenders will still be able to undertake many transactions in this area on an execution only basis, including consolidating fees into the loan.
"As this is an area that has been recently causing concern amongst the consumer lobby, I remain to be convinced that MMR does enough to protect consumers.”
And Andrew Montlake, director at Coreco, agreed with Sinclair.
He said: “Although the MMR has at least rectified many issues, the FSA have still caved in to lenders’ demands that some product changes, especially where fees are added to the loan, can still be done on an execution only basis which could lead to some customer discontent.”
