Lenders bumping up arrangement fees

Posted: 17 Jul 2007 11:07:10 GMT

A number of mortgage lenders have been exposed as bumping up arrangement fees in order to offer 'attractive' deals.

A number of mortgage lenders have been exposed as bumping up arrangement fees in order to offer 'attractive' deals.

As lenders vie to appear on best-buy tables, some are accused of offering low interest rates but making their money back by increasing arrangement fees by as much as 600 per cent.

Intelligent Finance, a subsidiary of Halifax, is highlighted in the Daily Mail as increasing its arrangement fees by 601 per cent in just two years.

A borrower can now expect to pay £2,999, an increase of £2,500, and Lisa Taylor from Moneyfacts said some lenders are trying to fool their customers.

"Lenders know that people tend to judge mortgages based on the headline interest rate," she told the newspaper.

"Consequently, they can use this to offer what appears a good home loan only then to introduce the arrangement fee as a sting in the tail.

"The fees have soared in the last few years, but there has been no increase in the amount of work involved to arrange a mortgage. There is no way the fees can be justified in terms of the work involved," she added.

Other lenders named in the report include Scottish Widows, where fees have soared by 678 per cent in two years, while Abbey, Nationwide, Northern Rock and Woolwich have also implemented big increases.

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