Darling Concerned Over Home Loan Fees
We reported recently about the already high and increasing arrangement fees which many banks and building societies are charging on their fixed rate mortgage loan deals.
Many lenders are charging initial fees on their products of seven hundred pounds and upwards, with some even reaching over £1000. In most cases the lender will allow this fee to be added to the loan, which makes the overall cost of the finance greater, as interest is being charged on the fee amount as well as the original loan amount borrowed.
The Chancellor of the Exchequer, Alistair Darling, has now issued a warning to lenders with regard to the level of arrangement fees they charge, saying that they must stop ripping off customers applying for a home loan who may already be struggling with affordability issues. He said “I’m very concerned that people ought to be treated fairly, especially people coming off fixed rates and going onto different rates. We have met the Council of Mortgage Lenders to try and reach an agreement to ensure that people are treated fairly, but if that isn’t happening I will ask the FSA to pursue the matter.”
Mr Darling has already had meetings with the Financial Services Authority (FSA) to discuss the level of arrangement fees charged on new loans and to ascertain what a fair and reasonable amount for such fees would be. Yes, we all know that banks and building societies are in business to make money for themselves and their shareholders and charging arrangement fees on home loans goes a long way to making the required profit margin.
The question is are these fees necessary for the institutions to make any profit at all, or are banks and building societies just being greedy with the level of fees that they charge? Mr Darling said “Everybody accepts that there are costs that have to be met when they change over, but I think we have to make sure people are treated fairly and not taken advantage of.”
In other news, financial service regulators have urged companies operating within the home loan sector to pay extra special attention to their customers needs when sourcing mortgage products. It has been suggested that firms should look to update their financial CRM systems as a means to increase both efficiency and productivity, whilst also ensuring that customers receive the highest levels of service.
