Mortgage lenders agree to scrap exit feesOthers will explain reasons for variable costs
02 August 2007
The majority of top mortgage lenders have agreed to scrap exit fees or to fix them for the term of a loan, the City regulator said.
Other lenders will continue to charge a variable mortgage exit fee that reflects the costs they incur when a customer repays their mortgage or switches to another provider, but they will only increase them for valid reasons that will be explained to consumers at the outset.
The Financial Services Authority had given firms a deadline to set out their position on mortgage exit fees for new customers.
It has already called on lenders to give refunds to former customers who had to pay a higher exit fee than was originally stated in their contract.
Many of the exit charges have doubled in recent years, and people can be charged as much as £300 just for repaying their loan.
Among the major lenders who have scrapped the fees are HBOS, which includes Halifax, Cheltenham & Gloucester, Standard Life, Royal Bank of Scotland/NatWest and Northern Rock.
Clive Briault, FSA managing director of retail markets, said: 'What we are seeing achieves our principal aim of stopping customers from being surprised by unexpected increases in these fees.
'Customers will know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be varied fairly. We will continue to monitor closely how firms treat their customers in this area.'
Which? personal finance campaigner Phil Jones said: 'It’s outrageous that mortgage lenders have been exploiting their customers with unjustifiable increases in exit fees for years.
'Any mortgage providers that can’t justify an increase in their exit fees should proactively refund the difference between the charge stated in the original contract and any increase.
'Dig out the paperwork and if what you were charged doesn’t match what’s on the contract, challenge your mortgage company.'
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