HBOS scraps mortgage exit fees
Britain’s biggest mortgage lender is scrapping mortgage exit fees after bowing to pressure from the City regulator, it emerged.
The HBOS group, which includes Halifax, said it would no longer be charging new customers fees ranging from £150 to £250 when they repaid their mortgage or switched to another provider.
The move comes after the Financial Services Authority (FSA) gave lenders until midnight on Tuesday to set out their position on fees for new customers.
It has already called on lenders to give refunds to former customers who had to pay a higher exit fee than was originally stated in their contract.
Some people have seen the fees double since when they took their mortgage out and when they repaid it.
The regulator said lenders could either abolish the fees or agree that they will not be increased during the term of a mortgage. If they continue to charge variable fees they will have to justify any increases.
But financial information group Moneyfacts said only a handful of lenders had responded to the call with just hours to go before the FSA’s deadline.Along with HBOS, the only groups which have so far announced they will scrap the fees are Cheltenham & Gloucester, Northern Rock, Standard Life, and the Royal Bank of Scotland Group, which includes NatWest. Coventry Building Society has reduced its exit charge.
A flurry of lenders are expected to announce changes later on Tuesday, just hours before the deadline.
Lisa Taylor, of Moneyfacts, questioned whether the lenders were taking the issue seriously or whether they thought they would be able to justify their fees.
She said: “They will not take this revenue loss lying down. They will look to recoup it.” She added they were likely to do this either by raising arrangement fees or even by renaming mortgage exit charges.