Chancellor warns banks about arrangement fees on mortgages
UK banks have been warned by the Chancellor of the Exchequer, Alistair Darling, to stop ripping off consumers with regards to the arrangement fees on mortgage loans, after it was revealed that many lenders have hiked up the fees charges on mortgage loans, leaving many consumers to try and find thousands of pounds in order to be able to get a mortgage. The chancellor also said that the he will be discussing the issue of arrangement fees with the financial regulator, the Financial Services Authority, in order to try and work out what can be classed as a fair fee.
Mr Darling recently said: ‘I’m very concerned that people ought to be treated fairly, especially people coming off fixed rates and going onto different rates. We have met the Council of Mortgage Lenders to try to reach an agreement to ensure that people are treated fairly, but if that isn’t happening I will ask the FSA to pursue the matter.’
He continued: ‘Everybody accepts there are costs that have to be met when they change over, but I think we have to make sure people are treated fairly and are not taken advantage of.’
The Council of Mortgage Lenders said that consumers should remember that there are some low arrangement fee mortgages still on offer, stating: ‘There is still a wide choice between mortgages with lower arrangement fees (and a potentially higher interest rate), and those with higher fees (often with a lower interest rate). What it is important to understand is the overall cost of the mortgage, taking into account both fees and rates – and the key facts document, given to all customers before they apply for a mortgage, provides this.’
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