Reclaiming Mortgage Fees?

Cashby

I appreciate I got a good rate with a high arrangement fee. I am more curious about the principle of being able to charge a high arrangement fee for actully doing no more to set up the mortgage than for a cheaper arrangement fee. It's more a question of principle. For example if the banks can't charge an unjustified amount for writing a letter, how can the mortgage companies charge so much for simple administration? Shouldn't it be the same rule for all?
I'm told this is next on the hit list for the FSA.

dunstonh

I am more curious about the principle of being able to charge a high arrangement fee for actually doing no more to set up the mortgage than for a cheaper arrangement fee.

You are making incorrect assumptions though. You seem to believe that money just appears by pressing buttons. Clearly that is not the case. Where do they get the money to lend? Where do you think the bank makes the money on many of these fixed rates?

For example if the banks can't charge an unjustified amount for writing a letter, how can the mortgage companies charge so much for simple administration?

whats so simple and risk free about it? Indeed, the risk is so great that look what happens when it goes wrong (NR).

Shouldn't it be the same rule for all?

No. Since when have retail charges have to be the same?

I'm told this is next on the hit list for the FSA.

Really? FSA always gives information on what it classes as high risk areas which could be subject to review or areas it is concerned about. Not one single hint from them that they consider arrangement fees an issue. There is no reason to even think there will be either as the FSA has rarely been interested in retail charges. Especially when their removal would see the end of a product. i.e. no more fixed rates (or far more expensive fixed rates).

Clearly you have chosen not to read the content of this thread or fail to understand the reasons fees exist. So, to put it on par with other things, I will give some examples.

You go to a car showroom and see 5 models. The prices are £10k, £20k, 30k, 40k and £50k. Your argument is that only the 10k car is legal and the rest are not.

Or how about televisions. Next time you go to Currys and see all the different televisions, complain that the they should all be the same price as its illegal that they are priced differently.

mystic_trev

Cashby wrote: »

I appreciate I got a good rate with a high arrangement fee. I am more curious about the principle of being able to charge a high arrangement fee for actully doing no more to set up the mortgage than for a cheaper arrangement fee. It's more a question of principle. For example if the banks can't charge an unjustified amount for writing a letter, how can the mortgage companies charge so much for simple administration? Shouldn't it be the same rule for all?
I'm told this is next on the hit list for the FSA.

I assume you had the choice of a higher Interest rate without an arrangement fee? Why didn't you take that :rolleyes:

MarkyMarkD

When people with 9 posts say things like

I'm told this is next on the hit list for the FSA.

you really do wonder who they've been talking to.

To clarify things, MEAFs have not been declared illegal. Nor have the FSA stated that excessive MEAFs are illegal. In fact, the FSA have said that lenders can charge anything they like for MEAFs as long as it's agreed and documented up front.

Exactly the same applies to mortgage product fees.

The idea that the FSA are going to do anything about this is naive and wrong. All it would do, as others have posted, is restrict valid consumer choice.

Some people genuinely value paying a 2.5% arrangement fee, in exchange for a very cheap payment rate. Why should they not have that choice?

owitemisermusa

To be fair, there was simply a lack of information/proper education about mortgages a few years ago.

For example, if someone had fully explained to me that the difference between 4.99% fixed for 2 years and 5.5% fixed for 5 years was Northern Rock, it might have made me see sense.

In the same vein, explaining that you are 'buying' a rate gives a certain clarity to things.

Some stores/retailers are expensive, others are not.

Of course there's the argument that it may be unnneccessarily exorbitant but honestly that is simply a matter of opinion in today's world.

MarkyMarkD

I'm not sure what you mean with your Northern Rock comment.

Northern Rock were very rarely the best value lender on the market. They achieved a huge market share by lending at higher multiples and higher loan-to-value percentages than other lenders.

dwsjarcmcd

Cashby wrote: »

I'm told this is next on the hit list for the FSA.

As has been mentioned previously.....no it's not!

Do you really think it's the remit of the FSA to restrict choice for everyone. If 'high' arrangement fees were outlawed, then all that would happen if that the price of fixed rates, and any other product would increase.

If you didn't want to pay a high fee, there are numerous other options available.

owitemisermusa

MarkyMarkD wrote: »

I'm not sure what you mean with your Northern Rock comment.

Northern Rock were very rarely the best value lender on the market. They achieved a huge market share by lending at higher multiples and higher loan-to-value percentages than other lenders.

I meant the credit crunch! aka financial crises!

MarkyMarkD

Yes, but what's that got to do with:

the difference between 4.99% fixed for 2 years and 5.5% fixed for 5 years