With the mortgage market becoming increasingly expensive for property owners, it is really welcome news to see that Chancellor Alistair Darling has urged banks to lower their arrangement fees and stop taking advantage of borrowers.
Some banks are charging arrangement fees reaching up to £3,000 and the Chancellor has warned the Council of Mortgage Lenders (CML) that legal action will be taken by the Financial Services Authority (FSA) if lenders do not treat borrowers fairly.
People who are coming off fixed rates and going on to different rates have been earmarked by Darling as particularly vulnerable to these exorbitant costs, though the Chancellor rejected the idea of an upper limit to arrangement fees.
The news comes at a crucial time for landlords. In the buy-to-let market many lenders are also seeking excessively high fees, asking for as much as 2.5 per cent of the overall loan amount on remortgages – when fees of 1 per cent or flat fees of under £1,000 were commonplace only a year ago.
I hope that this news from the Chancellor is not just an announcement designed to please the electorate, however. While this is a good first step, in his year in office, Alistair Darling hasn’t always delivered on his initial promises, or worse, has made unhelpful and unpopular policy announcements which he has then only partially reversed.
If it is to be effective, this threat of action has to be real, and the FSA should make specific recommendations and take specific action if lenders don’t comply. This news is an opportunity for the Chancellor to turn over a new leaf, and I hope that on this occasion, he really does mean what his says and will deliver a real relief for borrowers.
Property Repairs in Dorset/Hants
