Abbey deters high LTV customers with arrangement fees
by Gill Montia
Abbey has become the first leading UK mortgage lender to demand advanced payment of arrangement fees on some of its loans.
Customers needing to borrow 95% of a property’s value will have to trump up £2,499 rather than add the charge to their loan.
Lenders have already applied penalties to the 95% mortgage market by saving their most attractive rates for borrowers who have larger amounts of equity in their homes. Many now require a minimum 10% deposit.
This has left borrowers requiring high loan-to-value (LTV) ratios (typically first-time buyers) facing higher mortgage costs than their better endowed peers.
Banks and building societies are nervous that high LTV deals could soon leave borrowers in negative equity, as house prices fall.
Abbey says that its average LTV stands at 48% and the new requirement on arrangement fees will only affect around 3% of customers.
The bank currently only has one 95% LTV deal on offer; a five-year fixed-rate loan at 7.04%, the arrangement fee is £2,499.
Discuss this in the Finance Markets forums
Story link: Abbey deters high LTV customers with arrangement fees
Add to Bookmarks:
Related financial stories to: Abbey deters high LTV customers with arrangement fees
- Arrangement fees double on best fixed-rate loans
- Fixed-rate remortgagers should factor in arrangement fees
- Mortgage lenders shift to uncapped arrangement fees
- Banking fees will result in customers changing banks
- High fees for mortgage debt advice
- Bank customers “annoyed” but willing to pay fees
- Chancellor threatens FSA regulation of mortgage fees
- Provident Financial picking up high risk customers
- Mortgage fees rise 20% in a year
- Abbey cuts rates for 15% deposit holders
Previous: « Fixed-rates loans at eight-year high for new borrowers
Next: HBOS shares climb, but still below rights issue price »
Visited 1260 times, 1 so far today
