Mortgage lenders could be making up for lost exit fee revenues, caused by an FSA investigation into the true cost of exit fees, by charging more from other fees, according to Moneyfacts.co.uk.
As the deadline for firms to justify their exit fees to the FSA has approached, many lenders have begun dropping exit fees or reducing them significantly.
Moneyfacts.co.uk research claims many lenders have increased their arrangement fee prices in July to make up for the loss of exit fees. Figures show some lenders have increased the fees they are charging by as much as £1000.
Moneyfacts.co.uk also claims some firms have been changing the name of their exit fee to get around the FSA. The website says Bank of Ireland has kept their fee at £195 but has called it a lending fee which can be paid at the start or end of a mortgage.
Julian Harris, mortgage expert at Moneyfacts.co.uk, says: “Lenders won’t be happy to lose this revenue, and the proof is in the pudding. Already we are seeing lenders half-heartedly adhering, using sneaky name changes. And could the increases in arrangement fees be used to supplement revenues lost in exit fee reductions?”
Harris says that lenders are generally increasing both interest rates and fees in order to make more profits at a time when borrowers are struggling to keep up repayments.
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