Lenders capitulate on mortgage exit fees

01 March 2007
As the Financial Services Authority (FSA) deadline for lenders to announce whether they would stabilise or raise mortgage exit fees arrived, no provider dared announce hiked fees.

The financial services watchdog set the deadline earlier this year after concerns that hiked mortgage exit fees for customers switching to a rival provider were being unfairly penalised.

Lenders who decided to raise future fees would be obliged to justify their decision.

But with the deadline upon them and under the spotlight of public scrutiny, "most lenders have gone for the original mortgage exit administration fee option," Robin Gordon-Walker of the FSA told BBC News.

Two lenders even went to the lengths of announcing cuts to their exit fees - Portman Building Society, which cut its fee from £199 to £145, and Skipton Building Society, which slashed its charge from £175 to £125.

Several lenders vowed to compensate customers for past losses while punitive exit fees were still in place, the Times reported, with only one small sub-prime lender, Kensington, outright refusing to refund former customers.

Northern Rock showed the greatest initiative, demonstrating that it had set aside a stash of £15 million for the purpose of customer compensation.

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