Following the decision by a number of mortgage lenders to increase their arrangement and exit fees, experts are saying mortgage holders might be deterred from applying for a remortgage.
Mortgage experts say that mortgage lenders are trying to retain mortgage customers and stop "serial remortgaging".
According to the Sunday Times, mortgage lenders attract mortgage holders by offering lucrative short-term mortgage deals. But once the discounted or fixed rate period nears expiry, mortgage holders start to search for a remortgage so they don't have to pay the high standard variable rate of the mortgage lender.
According to Simon Tyler, a mortgage broker at Chase de Vere Mortgage Management, arrangement fees have more or less doubled over the last four years, and exit fees have showed an even steeper rise.
He said these hiked fees bring the mortgage lender extra profit that enables them to offer lower headline mortgage rates and appear to be better value.
"But because of the high fees now attached to many products, borrowers need to be aware that the lowest rate no longer necessarily means the cheapest deal," he told the Sunday Times.
Research by the newspaper found that Alliance & Leicester is the mortgage lender charging the highest average fees for those that want to remortgage their properties.
The mortgage lender was followed closely by Northern Rock, Abbey, Halifax and Cheltenham & Gloucester.
Mortgage lenders hike fees to slow remortgaging
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Mortgage lenders hike fees to slow remortgaging
Mon, 19 Sep 2005
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