A growing number of mortgage providers are increasing their redemption fees according to recent research by the Moneyfacts mortgage team.
In the twelve months to 31 March 2005, 53 providers have upped their redemption penalty, 23 of which had increased by over 100 per cent. Some examples of the higher fees are Alliance & Leicester increasing their fee from £195 to £295, Cheltenham & Gloucester from £100 to £225 and the Royal Bank of Scotland from £75 to £225.
With the mortgage market as competitive as it has ever been and with interest margins being eroded, lenders are increasing their fees to try to recoup some of the lost revenue but also to deter customers from switching their mortgage.
Moneyfacts head of mortgages Darren Cook says: “If you are only looking at keeping your mortgage with the same provider for a couple of years, a £295 exit fee certainly needs to be taken into account when shopping around.”