Nationwide urges lenders to drop HLCs
Nationwide Building Society has predicted nearly 100,000 borrowers will be affected by HLC in 2006, with borrowers each paying an average of £2,000 to enable them to obtain a higher loan-to-value (LTV) from some lenders.
Nationwide Building Society’s executive director, Stuart Bernau, urged lenders to follow Nationwide’s lead and abolish HLCs. He said: “Not only are higher lending charges unwelcome for homebuyers, they are also avoidable. Consumers need to be aware that the headline interest rate is not all they pay. They must also take into account and be aware of the fees and charges that form part of their mortgage deal.”
He added that with the minimum stamp duty only going up by £5,000 many borrowers, especially first-time buyers, would be hindered by HLCs. He said: “With first-time buyers paying an average of more than £128,000 on their property they could end up spending nearly £4,000 on higher lending charges and stamp duty alone.”
Peter O’Donovan, mortgage manager at Bestinvest, agreed with the lenders decision to try to end the charging of HLCs and said more providers should do the same. He commented: “The sooner lenders get rid of charging a higher lending fee the better. They should be something of the past and I do my best to avoid lenders that have a higher lending charge, even though it might mean I lose out on fees. Although some lenders include this as part of the loan, borrowers spend the first few years paying this off, which means they’re not actually paying of any of their actual mortgage.”