Consumers being squeezed by lenders
Research earlier this week from Moneyfacts showed headline grabbing rates are a con as consumers are forced to pay high fees.
Over a four year period the average mortgage fee rose from £889 to £1514 equating to a 70.3% increase.
Rob Killeen, broker at Capital Fortune, claimed consumers are being squeezed to line the pockets of lenders.
He said: “We have been concerned borrowers are suffering increased costs on all products across the board.
“It seems that there is a push for lenders to increase margins and profitability at the expense of the general customer, despite receiving record low cost international funding.”
Sally Laker, managing director of Mortgage Intelligence, sympathised with the lenders’ need to attach high fees to low rates, describing it as a “catch 22” situation.
Laker says lenders need to make the best margin they can on their mortgages to subsidise attractive savings rates to draw money in so they can lend more.
She added: “There is also enhanced emphasis on quality, driven by the Mortgage Market Review MMR, which increases the amount of administration and processing time of a mortgage, leading to increased costs.”
Richard Hurst, Marketing Director of CDS Mortgages, was sceptical over the accuracy average fees due to the diverse nature of the market.
But he added: “Seeking independent advice is key and brokers should use a sourcing system that breaks down fees and charges so the true cost of the mortgage is clear.”
A spokeswoman from the Council of Mortgage Lenders said: “From the consumers perspective what matters is the overall cost of the deal – a combination of the fee and the rate”, addingwhat matters is that fees are transparent so the consumer can make an informed choice.
A Building Society Association spokeswoman said: “Mutuals pride themselves on understanding the needs of their customers and would encourage concerned consumers to shop around in order to understand the options available.”