Halifax criticized over new mortgage fee
June 30, 2008
Britain’s biggest mortgage lender Halifax were criticised for introducing a new £245 mortgage fee which means buying a home or remortgaging with them is even more expensive.
The Halifax has been accused of “sneaking” in the new fee. The fee now applies to all new mortgages taken out from Halifax and Royal Bank of Scotland. The chancellor, Alistair Darling, last week urged lenders not to take advantage of borrowers by introducing huge fees.
The new “mortgage account fee” is a fixed charge that Halifax will add on to the home loan on completion. The lender said it included several different fees that a borrower could incur throughout the life of the mortgage such as the duplicate fee and the “deed dispatch fee”.
A spokeswoman said the bank was “simplifying the structure by bringing all these ad hoc fees together” into “one transparent payment.” She also said that the £245 fee is less than all the other fees added together, although she did admit that not all customers have to pay some of these costs during the life of their mortgage. The fee will not be added directly to the loan which means it will remain interest free for the life of the loan.
Melanie Bien, at mortgage broker Savills Private Finance, and others have not been impressed by the timing of it. Ms Bien said “It’s a little bit of a kick in the teeth for borrowers. It seems an unusual time to be introducing this fee, given market conditions and the fact that it is much more expensive for borrowers and people are struggling more.” She added “How much does it cost to issue a duplicate statement or close an account?”
Louise Cumming, head of mortgages at comparison site moneysupermarket.com, agreed saying that HBOS, the group that owns Halifax, had waited until the debate over mortgage exit fees had died down before “sneaking in a more expensive charge”.
She added “Disappointingly, it has now decided to introduce a fee of £245, just when borrowers are feeling the pain of increasing rates and the rising cost of living. I urge HBOS to scrap this decision. Borrowers need all the support they can get at the moment, and more decisions like this from other lenders could shift the housing market from a stagnating slump into a fully-blown crash.”
See www.halifax.co.uk for more information.
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