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Exit fees scrapped
(02-08-07) - The controversial mortgage exit fees have been scrapped by the majority of the big lenders this week.
The Financial Services Authority (FSA) had given banks a deadline of midnight 31 July to either justify the fees, or abandon them.
HBOS, the UK’s biggest mortgage lender, which includes Halifax scrapped its £225 fee for new customers, while the Bank of Scotland, which includes Natwest said it would drop its £200 charge. Lloyds TSB, Northern Rock and Cheltenham & Gloucester also relented.
Alliance & Leicester however, chose to retain its fee - the highest in the market at £295.
Exit fees are charged to cover admin costs when a mortgage is closed either when it is paid off or when the customer switches to a new provider but came under fire from consumer groups and MPs when lenders began increasing the cost during the term of the mortgage.
Chris Eagle, CreditChoices.co.uk commercial manager, said: “While the scrapping of these expensive fees is a welcomed move, it’s more than likely that lenders will introduce a new fee or charge to compensate for the loss of a money maker worth millions every year.”
