Alistair Darling, Chancellor of the Exchequer, has threatened to force official FSA regulation of mortgage fees if mortgage lenders do not sort something out.
As a CeMAP qualified mortgage advisor, mortgage fees are something you will have to take into consideration when finding the right mortgage for your client, and a high mortgage fee is another barrier to obtaining a mortgage for many people. When combined with the mortgage advisor’s fee, it can be a considerable sum that clients need to find.
The average mortgage lender’s paid fee is now more than £800, which is a considerable increase from the average of £441 from 2005. It is not unusual to see mortgage charges of approximately £1,000 on fixed rate mortgages and some other special products, which include arrangement fees. Arrangement fees are usually based on a percentage of the mortgage loan, and with house prices increasing so dramatically over the last few years, this can cost a client thousands of pounds in arrangement charges.
The Chancellor asys that many of these charges are unfair and has requested that mortgage lenders take voluntary acction. He has further commented that if this action is not forthcoming then he may involve the Financial Services Authority (FSA) and ensure that mortgage arrangement fees are formally regulated, a move that few mortgage lenders would welcome.
The Council of Mortgage Lenders (CML) was quick to point out that many of its members do still provide many fee-free mortgage loans, however, it also pointed out that borrowers need to understand the overall cost of their mortgage, taking into account both interest rates and mortgage fees. This is something CeMAP course delegates learn about on their CeMAP course, and all mortgage advisors should be ensuring their clients understand this.
Indeed, when taking your CeMAP exam, there is often a question or two about the Key Facts document that must be provided to customers before they make their mortgage application and this information is contained therein.