Shadow Treasury financial secretary Chris Leslie says high mortgage fees could be the “next big scandal”.
Speaking at a fringe event at the Labour conference in Brighton today, Leslie said lenders should inform borrowers about the impact of rolled up mortgage fees every year and not just at the start of their term.
Moneyfacts data shows such fees hit a 25-year high of £1,522 in the first week of April as lenders compensate for low rate margins with higher charges.
He said: “I worry about the mortgage sector where a lot of fees and charges are just walloped on the top and ‘oh well we can just deal with it at the end of a 25 year term’. I think one of the next big scandals to come could be mortgage exit fees and some of those charges.
“Superficially bank rates appear to be ultra-low but people may be under the impression that this is normal. At some point interest rates will rise and when people try to change their mortgage they will realise that it will be incredibly difficult because the costs have not been thought through properly.
“More information and transparency is vital and I think that instead of telling people at the beginning of a mortgage what the scenarios are for various interest possibilities, every single year a mortgage lender should tell customers what their scenarios are. It should be something which is managed year by year for customers and not just forgotten about because that is one of the biggest scandals around the corner.”