Mortgage Exit Fees

A Statement of Good Practice, issued by the FSA in January, highlighted that consumers were being charged higher exit fees than they had expected.

The Statement aimed to stop existing customers being charged unexpected increases to MEAFs and to provide a basis on which past customers could seek compensation. It also set out the FSA's expectation for how future customers should be treated and that lenders should review their approach to this by the end of July.

The FSA has analysed the responses of a sample of firms, comprising a significant proportion of the mortgage market, on the outcome of their reviews of how to treat future customers. This shows that:

most major lenders have opted either to charge a fee that cannot be varied during the lifetime of the mortgage, or to remove the MEAF altogether; and
other lenders will charge a MEAF which reflects the administrative costs when the customer exits the mortgage. The MEAF should only be varied for valid reasons clearly explained at the outset.
Clive Briault, FSA Managing Director, Retail Markets, said:

"What we are seeing achieves our principal aim of stopping customers from being surprised by unexpected increases in these fees. Customers will know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be varied fairly. We will continue to monitor closely how firms treat their customers in this area."

Key issues for consumers to consider are:

If you think you have been charged a higher exit fee than the fee stated in your mortgage contract, contact the lender to find out if you are eligible for a refund of the difference. You may not need the original mortgage documentation to claim. If you give your name and the address of the property, the lender should be able to find your details.
From now on, you should know when you sign up for a mortgage what exit fee you will pay, or should be given a clear idea of how the fee might be varied in the future. This transparency and fairness will allow you to make an informed decision about which mortgage product is best for you.
Check all the mortgage fees as well as the interest rate when comparing mortgages. Consider what impact the fees will have on the overall cost of borrowing.

fixed rate mortgages

With the issue of long-term fixed rate mortgages high on the political agenda, new data from the CML shows that the appetite for short-term fixed rate mortgage deals is still strong among first-time buyers and home movers. The survey revealed that 89% of first-time buyers and 73% of home movers took out a fixed rate mortgage loan - albeit mostly on a short-term basis - in May, up from 88% and 72% respectively in April.

The CML's regulated mortgage survey also found worsening affordability continues to impact all home-buyers as well as existing borrowers. Today's data does not take into account either of the 0.25% rate rises in May and July - so it is inevitable that affordability pressures will become even more pronounced in the coming months.

Today's survey revealed that first-time buyer income multiples reached their highest-ever level in May at 3.37 times the average first-time buyer income, up from 3.33 times in April. And, mortgage interest payments continued to rise, reaching 19.1%, up from 18.7% in April - their highest level since 1992.

Home movers also face increased affordability constraints. In May the average home mover income multiple reached a record 3.03 times, up from 3.01 times in the previous month. And, the proportion of income used to pay mortgage interest also jumped to 16.6% from 16.3% in April.

With a new prime minister committed to improving access to affordable housing, the survey revealed that more and more first-time buyers and home movers pay stamp duty. In May, a record 60% of first-time buyers were liable to pay the tax, up from 52% in May 2006. The number of home movers that paid stamp duty also reached a new record at 86%, up from 82% in May last year. It should be high on the government's new housing agenda to reduce the tax burden on buyers to offset the impact of increased mortgage costs.

Commenting on the latest data, CML Director General Michael Coogan said:

"For anyone wanting to get a foot on the property ladder or move house, each month affordability is becoming worse. The record number of borrowers who are now paying stamp duty makes a difficult situation even worse, despite the financial windfall to the Treasury. This needs to be addressed urgently.

"Taking out short-term fixed-rate mortgages may provide some reassurance, but eventually the loans will revert to a variable rate and the risk of a payment shock is real. Planning ahead for higher payments is as important as the initial decision to shelter from the risk of higher borrowing costs. Financial difficulties are set to rise so it is essential borrowers speak to their lender if they are having repayment difficulties to avoid becoming another arrears statistic."

Shropshire Mortgages

The rapid growth in house prices in Northern Ireland has contributed to the number of first-time buyers reaching its lowest level for 26 years, the Council of Mortgage Lenders said today. The chairman of Council of Mortgage Lenders Northern Ireland, Derek Wilson, urged the newly formed Northern Ireland Assembly to tackle the shortage of affordable homes which has helped fuel spiralling house price inflation over recent years.

House prices have trebled in 10 years, and the number of first-time mortgage buyers has more than halved in five years. The average house price in Northern Ireland is currently £210,349 - this is higher than the UK average mortgage (£205,797) and is more than three times its 1996 level. And while house prices have been increasing, the number of first-time buyers has fallen into decline – from 18,300 in 2001 to just 8,000 in 2006.

Addressing over 150 delegates at the Hastings Europa Hotel, Council of Mortgage Lenders Northern Ireland chairman Derek Wilson said:

“Over the past year house prices in Northern Ireland have outstripped the rate of increase in other areas of the UK. It is no surprise that with house price inflation reaching 23.4% in 2006 we now have the lowest number of first-time buyers entering the mortgage market since 1980.”

“Council of Mortgage Lenders urges the Northern Ireland Assembly to address affordability constraints by implementing some of the reforms proposed in Sir John Semple’s report on affordable housing. This includes increasing the supply of affordable housing and examining whether a shared equity scheme - like HomeBuy in England - could play a part in helping more first-time buyers on to the property mortgage ladder.

“Mortgage lenders already offer a range of innovative mortgage products to help people buy their first home, but they cannot solve the affordability issue on their own. Council of Mortgage Lenders looks forward to working with the Northern Ireland Executive and the Social Development Committee to find ways of helping those who want to become home-owners.”

This article is brought to you in association with MLM Financial specialist in Shropshire Mortgages.

Shropshire Mortgages

Nationwide Building Society today announces an increase in rates on its range of fixed rate and tracker mortgages. The new rates are available from Friday 1 June 2007.

The new details are as follows:
Home Mover
Two year fixed rate mortgages(with £499 fee) available from: 5.68%
Two year fixed rate mortgages (no fee) available from: 6.08%
Two year fixed rate mortgages (with £999 fee) available from: 5.53%
Three year fixed rate mortgages (with £499 fee) available from: 5.88%
Five year fixed rate mortgages (with £499 fee) available from: 5.68%
Ten year fixed rate mortgages (with £499 fee) available from: 5.68%
Two year tracker mortgages (with £599 fee) available from: 5.28%
Two year tracker mortgages (no fee) available from: 5.68%
Lifetime tracker mortgages (no fee) available from: 5.79%

Remortgage and Additional Borrowing
Two year fixed rate mortgages (with £499 fee) available from: 5.78%
Two year fixed rate mortgages (no fee) available from: 6.18%
Two year fixed rate mortgages (with £999 fee) available from: 5.68%
Three year fixed rate mortgages (with £499 fee) available from: 6.03%
Five year fixed rate mortgages (with £499 fee) available from: 5.78%
Ten year fixed rate mortgages (with £499 fee) available from: 5.78%
Lifetime tracker mortgages (no fee) available from: 5.94%

Existing Nationwide mortgage customers get a £100 discount off their reservation fee when they switch from one Nationwide product to another, buy a new home or borrow additional monies.

Nationwide will also be increasing the maximum loan to value (LTV) for remortgages from 90% to 95%.

Nationwide will withdraw its current range of products at 11.59pm on Thursday 31 May 2007.

MLM Financial supply nationwide mortgages. you can visit MLM Financials website at www.mlmfinancial.co.uk