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Lenders still overcharging on exit fees
12 October 2006 11:00
Britain's mortgage lenders have been accused of ignoring the directives of the Financial Services Authority (FSA) and continuing to levy overly high exit fees from borrowers.
Earlier this year, the FSA warned that exit fees should only cover the administrative costs of selling a mortgage and censured those lenders who sharply raise these charges after they have already issued the product.
Now a new report by moneysupermarket.com claims that these warnings have not been heeded, nor have any institutions taken up the FSA's request for them to openly explain and justify their own exit fees.
Head of mortgages Louise Cummings explained that, even if lenders do consider it necessary to charge borrowers extortionate fees so as to cover managerial expense, there is still no need to raise them after the mortgage has been sold.
Moneysupermarket.com criticised certain lenders for wilfully continuing this practice, although it did single out ING Mortgages' new no exit fees deal for praise.
Ms Cummings said that the 4.95 per cent interest rate charged on this no-frills, two-year fixed rate product could perhaps be bettered elsewhere, but welcomed the offer as a step in the right direction for the mortgage market.
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