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Brokers warned as lenders raise arrangement fees

Brokers are being warned to watch out for lenders which have been increasing arrangement fees by up to £700 in January while also raising their interest rates.

The issue has been highligh-ted by both Which? and Moneyfacts while Chase de Vere Mortgage Management has slammed lenders for piling pressure on first-time buyers by raising up-front costs. Moneyfacts data shows that Northern Rock has increased fees from £1,295 to £1,995, Abbey from £799 to £999, Bradford & Bingley from £499 to £699 and GMAC-RFC from £595 to £795.

The rises come as most remaining fixed and tracker rates yet to rise are set to increase this week due to last month’s interest rate jump to 5.25 per cent.

Lenders have also blamed rising swap rates for increased rates although the industry came under fire last week from the FSA for raising exit fees during a contract term, with the practice effectively outlawed.

Moneyfacts spokeswoman Lisa Taylor says: “Arrangement fees have been growing at a rate of 300 per cent in the last 10 years.”

See our Mortgage View – ‘Borrowers in a fix on rates’

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