Arrangement fees 'increasing sharply'

26/08/2008

UK mortgage lenders have been accused of keeping their fees falsely high, the Times reports.

New figures from data firm Defaqto suggest that arrangement fees on mortgage deals have been hiked markedly by the firms, in order to protect their credit crunch-hit profits.

The one-off charges have been raised by 183 per cent by HSBC over the past year, with RBS and Abbey not far behind on 110 per cent and 92 per cent respectively.

Typically, a fixed rate mortgage deal now costs a fee of £50 more - with lenders earning an extra £3 million last month from the hikes.

All this comes despite there being no discernable change in administration costs or services rendered from the firms.

David Black at Defaqto said: "Lenders are able to use arrangement fees as a hidden way of boosting the overall cost of the mortgage."

He added: "It's worrying that some of the lenders taking the most business have introduced the biggest fee increases."

Tags; Current UK Economy, Housing Debt and Bills, Debt Management and Banking, Budgeting Advice,

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