More mortgage lenders scrap exit fees by Finance News Bulletin

Published: 11/09/07

Banks and building societies are scrapping house loan exit fees imposed on customers when they move their mortgage to a competitor

that's the warning from one economist Read the report and join the 'reader comments' debate: possessions crashThe move by about half the nation's lenders follows censure of the way the industry has used unfair exit cost to boost profits while punishing customersThe Financial Services Authority decided to do something after it emerged that way out fees on mortgages sold to millions of homebuyers were being increased without any good cause Some who took out a mortgage where the exit fee was, for instance, £50 suddenly found that this had been increased to £200 or £300 when they decided in the direction of move in the direction of another lender

The FSA took the view these increases were unjust and against the law and gave the industry an ultimatum to rectify the situation or face the option of court actionMore than 150,000 customers who lost out to the trick have been able to maintain refunds totalling millions of pounds over the past six monthsThe refunds typically associate to around £100-£200 per person and it is thought likely that they will finally cost the industry up to £200munconnectedly, the FSA gave the industry until yesterday to decide what it would do with exit fees imposed on all mortgages sold from today beyond

Around half have decided to scrap them completely for new clientele, while virtually all the rest have given a commitment that they will not add to the exit fee beyond the figure in the original agreementA handful of small lenders retained the right to increase the charge The FSA said they will be allowed to do so only if they can show there has been a genuine increase in the costs of closing a mortgage accountAn FSA spokesman said: 'We conventional a large figure of complaints from homebuyers who felt it was wrong that fees could be increased in this method

It was rather like paying £8 for a cinema label only to be met on the way out by two heavies employed by the organization who said the price had gone up and you would have to pay more before leaving'The FSA will issue a report this week spelling out how lenders will be applying exit fees in future the past the main mortgage lender, Halifax-Bank of Scotland, said it would be scrapping the exit cost on all the new mortgages it sells However, there are suspicions the industry will just recoup any lost profits by putting up other charges, such as the arrangement cost

Banks and building societies have told the FSA over the history few weeks how they plan to handle exit cost for sales of new mortgages, ahead of yesterday's deadline It supposed around half are scrapping them completelyThe FSA would not identify which are doing so However some, such as HBOS, made their choice public

Others to scrap the cost include Cheltenham & Gloucester and the Royal Bank of Scotland group, including NatWest Abbey is scrapping its way out fee but replacing it with a new £225 mortgage account charge which will not rise above price risesBarclays will stick with its £275 exit fee practical to sales of new mortgages through the Woolwich It will not be increased once the mortgage is signed

This is Money says: Reclaiming unfair mortgage way out fees is fairly straightforward Our easy-steps guide explains how to do itSelect a loan term 12 months (1 day 24 months (2 existence 36 months (3 existence 48 months (4 existence 60 months (5 years) 72 months (6 years) 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a kind of insurance Life cover Home and contents Car Breakdown services Health - medical Health - dental Travel favorite - dog favorite - cat GOThinking about investing in property This is cash has the

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