It says that up to now, the only major player to use such a fee was Lloyds TSB, with a £99 booking fee.
A John Charcol spokesman says: “This is just another step in the complete about-turn in the mortgage market from just a year ago. Consumers have been king for many years now, with lenders fighting for their business, often at loss-leading rates, but that has been consigned to history and these booking fees are another stark reminder of that.”
He points out there are many things that can happen during a mortgage application that may result in a borrower being unable to compete, a great deal of which a lender can be accountable for.
“Traditionally, this has not cost borrowers anything other than wasted time and maybe some legal fees. However, if they do not complete on a mortgage with an up-front fee, it will cost them cash,” the spokesman says.
But Abbey has dismissed the criticism, saying that the fee is refundable if the application is declined.
An Abbey spokesman says: “Only a small proportion of the fee is required up front. This up-front payment has become more necessary in the current economic climate and guarantees the rate for the customer.”