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Mortgage fee cuts ‘next battleground’ for lenders

Brokers say mortgage fees could be the next battleground for lenders, with little room for them to lower fixed rates further.

In recent weeks, lenders including Accord Mortgages, Barclays, Hinckley & Rugby Building Society, Skipton Building Society and Virgin Money have announced cuts to fixed-rate mortgages.

As lenders seek to remain competitive, London & Country associate director of communications David Hollingworth says they will increasingly turn to low-fee and fee-free products.

He says: “It’s good to see lenders repositioning and getting more competitive. In terms of how they can continue to attract more business in an environment of low rates, I think we will start to see more fee-incentive products.

“There isn’t huge capacity for further rate cuts so fees could be the next battleground for lenders.”

Start Financial Services manager Tom Cleary says: “There are a number of products on the market with low or no fees. If lenders want to stay competitive, that’s likely to be the way to do it because rates are probably as low as we are going to see.” 

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Personally I would ban fees such as application arrangement fees it confuses the public as not all of them can calculate all setup costs monthly payments and outstanding capital balance at the end of a term to calculate which is actually the cheapest mortgage.

    Every time criteria tightens the lenders get into a price war. I suspect they are struggling to lend the funds they have available.

  2. The Cynical Broker 1st August 2014 at 2:05 pm

    Did I miss something ? At the start of June 2 Year Swap was 1.15%, 3 Year was 1.73% and 5 Year 2.04%. As of yesterday they were 1.37%, 1.73% and 2.21% respectively! Over the last month there has been almost no change, so where does the headline “swap rates plummet” come form ?

  3. William, you are right, but of course that is what we are here for, to advise clients which is best for them.
    Remember CAT mortgages? They were simple, but not always competitive.

  4. oooh cat mortgages always a head scratcher when a cat mortgage test question comes up.

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