Mortgage Lenders Back Down Over Raised Exit Fees

Mortgage providers accee to regulator demands to peg back exit fees

28th February 2007

It appears that the recent trend for mortgage companies raising their exit penalties will end, after FSA pressure to justify any such raises.

The financial regulator said in January that any company that intended to charge a higher exit fee, or a penalty for repaying a mortgage early, than that in the original mortgage agreement would have to 'justify' their decision by today. If they could not do so, they would have to either revert to the original figure or drop the charge altogether.

Exit fees were originally intended to only cover the administration costs involved in shutting down a mortgage account, but huge rises in the amounts charged over recent years has led many analysts to question whether they were now functioning as a further profit source for mortgage lenders.

The fact that to date no lender has attempted to justify their rises perhaps tells its own story. 

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