Mortgage exit fees on scrapheap

Mortgage lenders are scrapping exit charges, levied when a home loan is paid off, following pressure from the Financial Services Authority (FSA).

HBOS, which includes the Halifax, has become the latest lender to scrap mortgage exit fees.

Earlier this year, the FSA said that lenders had raised mortgage exit fees too rapidly and some customers could be in line for a refund.

But lenders are simultaneously raising mortgage set-up fees, researchers say.
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FSA closes on mortgage exit fees

Lenders have been given until Wednesday by the Financial Services Authority (FSA) to choose how to charge customers wanting to settle their mortgages.

They are charged an exit fee of between £150 and £300 for administration costs alone.

The exit fee is listed on a homebuyers's mortgage paperwork, but the charge is frequently higher when the borrower comes to settle their balance.

The level of mortgage exit fees has shot up in the last four years from an average of less than £100 to almost £300.
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Firms yield on mortgage exit fees

Most mortgage lenders have obeyed demands that they stop charging excessive fees for closing a mortgage.

In January, the Financial Services Authority (FSA) told lenders that they would have to justify raising mortgage "exit" fees.

The FSA said if they could not do so by 28 February, then they would have to agree to charge no fee at all, or stick with their original fee.

An FSA spokesman said so far, no lender had opted to keep the higher charges.

"Certainly the impression we are getting as we go through the responses is that most lenders have gone for the original mortgage exit administration fee option," said Robin Gordon-Walker of the FSA.
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