Little Professor Posted July 17, 2007 Share Posted July 17, 2007 Homebuyers are being lured into taking up what appear to be good value mortgage deals only to be stung with huge fees. Some leading lenders have increased their arrangement fees by more than 600 per cent in the last two years. Banks and building societies can manipulate where they appear in best-buy tables by appearing to have low interest rates when in reality, they are simply switching their charge to the arrangement fee. Yesterday finance experts warned that the practice was conning the consumer, in a month which saw the fifth interest rate rise in less than a year. Experts have warned that already-overstretched firsttime buyers now face the most unaffordable property prices since before the last market crash 16 years ago, coupled with punishing stamp duty bills and the prospect of more rate rises before the end of the year. http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 Quote Link to comment Share on other sites More sharing options...
The Colour Posted July 17, 2007 Share Posted July 17, 2007 It's a way of offsetting their higher lending costs. If they are not charging these high fees expect their SVRs to increase instead. Quote Link to comment Share on other sites More sharing options...
Fergie Posted July 17, 2007 Share Posted July 17, 2007 I guess the arrangement fee reflects their fears for where IRs might be going, right? If they're charging that much for a fix, they must be pretty worried that they're heading upwards. Quote Link to comment Share on other sites More sharing options...
ScaredEitherWay Posted July 17, 2007 Share Posted July 17, 2007 Or maybe it's their own little stealth MIG-style pot of cash. Quote Link to comment Share on other sites More sharing options...
Little Professor Posted July 17, 2007 Author Share Posted July 17, 2007 Sorry, I wrote mortgage fears instead of mortgage fees. Quote Link to comment Share on other sites More sharing options...
redgenieuk Posted July 17, 2007 Share Posted July 17, 2007 Homebuyers are being lured into taking up what appear to be good value mortgage deals only to be stung with huge fees. Some leading lenders have increased their arrangement fees by more than 600 per cent in the last two years. Banks and building societies can manipulate where they appear in best-buy tables by appearing to have low interest rates when in reality, they are simply switching their charge to the arrangement fee. Yesterday finance experts warned that the practice was conning the consumer, in a month which saw the fifth interest rate rise in less than a year. Experts have warned that already-overstretched firsttime buyers now face the most unaffordable property prices since before the last market crash 16 years ago, coupled with punishing stamp duty bills and the prospect of more rate rises before the end of the year. http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 The trouble is that these people will add the fee to the mortgage and take the lower rate. They should not be allowed to do this, they should be made to pay it upfront. Its another case of getting today and paying in the future. Quote Link to comment Share on other sites More sharing options...
christhpc Posted July 17, 2007 Share Posted July 17, 2007 (edited) The FSA should force mortgage lenders to show the APR along with any headline interest rate. Same as the laws that force companies to show the VAT inclusive price for any consumer-facing price tag. Although that might just cause a wee bit of panic amongst the profligate. Edited: because I'm a spanner Edited July 17, 2007 by christh Quote Link to comment Share on other sites More sharing options...
Leonard Hatred Posted July 17, 2007 Share Posted July 17, 2007 It's a way of offsetting their higher lending costs. Hairy Little Cat - meow! Quote Link to comment Share on other sites More sharing options...
bomberbrown Posted July 17, 2007 Share Posted July 17, 2007 The FSA should force mortgage lenders to show the SVR along with any headline interest rate. Same as the laws that force companies to show the VAT inclusive price for any consumer-facing price tag.Although that might just cause a wee bit of panic amongst the profligate. Or similarly have to show whats similar to the APR like you get with credit cards etc. i.e. the Arrangement fee should be included in the rate for easy comparison. Surely this is what the FSA are paid to do! Quote Link to comment Share on other sites More sharing options...
The Colour Posted July 17, 2007 Share Posted July 17, 2007 Hairy Little Cat - meow! Whats that you say? Quote Link to comment Share on other sites More sharing options...
Tonester Posted July 17, 2007 Share Posted July 17, 2007 The trouble with APR is over what term? Useless over 25 years since you very unlikely to keep the mortgage that long. When I bought a mortgage I used the internet to compare and the best site had a setting to explain cost of X years which you could define to be, say, 5 years. Finding the best mortgage depends on 2 things you need to estimate: 1) where rates are going 2) how long before you want to move. Trouble is both are hard to predict. Quote Link to comment Share on other sites More sharing options...
christhpc Posted July 17, 2007 Share Posted July 17, 2007 Or similarly have to show whats similar to the APR like you get with credit cards etc. i.e. the Arrangement fee should be included in the rate for easy comparison. Surely this is what the FSA are paid to do! Oops, yeah I meant APR, not SVR. And yes, Tonester APR is trickier to calculate for mortgages but the mortgage companies do provide it - if not on their rates page then if you dig a little deeper into their literature. e.g. http://www.nationwide.co.uk/mortgage/remor...erest_rates.htm It's just the best-buy tables especially that are particularly evil and misrepresentative. Quote Link to comment Share on other sites More sharing options...
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