Nationwide claims borrowers are being ‘ripped-off’

Ramesh Sharma

June 1, 2004

Nationwide has claimed that borrowers are still being ‘ripped- off’ 12 months after ‘Mortgage Day’. A year on from regulation, the UK’s biggest building society has suggested a number of lenders are still actively taking advantage of consumers with higher lending charges (HLCs), annual interest and product tie-ins all contributing to consumer concerns.

It also warned against using lenders that only offer their ‘best rates’ to new customers. The Society named Abbey as one of the offenders for retaining a HLC on its products as well as offering ‘new buyer’-only mortgages.

However, Abbey refuted claims that its customers were being ‘ripped-off’. Joe Wiggins, media relations manager at Abbey, said: “Of course borrowers should shop around for the best deal, not just with the rate but with fees and charges as well.

“With regards to the HLC we include this on high borrowing as it is more risky for us. Indeed many first-time buyers tend to end-up paying a HLC because they realise the greater their deposit the better deal they can get.”

Ron Stout, press officer at Northern Rock, also dismissed claims that its borrowers were being mistreated due to the charging of certain fees. Northern Rock currently includes extended redemption penalties on its products and charges consumers a one-off administration fee for taking alternative insurance.

Stout said: “It has always been our stance that borrowers should look at the whole package including the rate, the fees and other charges before deciding what is best for them. The key issues for the market are transparency and treating customers fairly. Mortgage regulation has certainly helped in that respect.”

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