Chancellor threatens FSA regulation of mortgage fees
Chancellor of the Exchequer, Alistair Darling, has warned the UK’s mortgage providers that they must put their house in order over arrangement fees.
The average fee paid is now over £800, up from £441 in 2005. Charges of around £1,000 are commonplace for a fixed-rate loan and some products, which carry arrangement fees based on a percentage of the loan, can cost thousands of pounds in arrangement charges.
The Chancellor is asking lenders to take voluntary action on unfair charges and has warned that if this is not forthcoming he could involve the Financial Services Authority and formally regulate mortgage arrangement fees.
The Council of Mortgage Lenders is keen to point out that its members still provide plenty of fee-free loans.
However, the Council stresses that borrowers need to understand the overall cost of their loan, taking into account both fees and rates.
All the information needed should be contained in the key facts document given to customers before they apply for a mortgage.