The Lender Strikes Back
We have reported on a couple of occasions over the past two weeks about the increasing costs associated with fixed rate mortgages and home loans, with regard to both the increasing interest Rates which are being charged on them and also on the high level of arrangement fees which usually end up being added to the loan and therefore costing even more due to added interest. The argument against these fees has been supported by the Chancellor Alistair Darling, who claims that lenders are “taking advantage” of vulnerable borrowers who in many cases are paying up to £2500 as an arrangement fee in order to be accepted for a loan.
Now, the Council of Mortgage Lenders (CML), the trade body which represents the major lenders in the UK, has struck back at Mr Darling regarding his comments. In a statement issued by the CML, they claimed that there had been discussions with the Chancellor regarding borrowers who were coming to the end of cheap loan deals and faced large increases in their monthly repayments, but no discussions regarding the current level of arrangement fees.
The CML also defended lenders products and policies with regard to home loans and mortgages, claiming that borrowers were not forced into paying arrangement fees as there were still some fee free deals available on the market and fees would only be charged if the customer re-mortgaged their home, they could still choose to remain on their current deal, although the cost would be likely to increase dramatically due to the increased interest rate.
In a statement, the CML said “Lenders are committed to fair treatment for people facing increases in their monthly payments and so far the signs are reassuring that most people are maintaining their payments successfully”. They also pointed out that under new guidelines from the CML, Lenders are giving their customers who are approaching the end of their current cheap loan deal, plenty of notice of the increased costs they are facing and also encouraging them to contact the lender if they feel that they will struggle with the new repayment level.
