Mortgage companies start to repay exit fees

Following a recent investigation into the extortionate amount of money that some mortgage providers were charging consumers by way of a mortgage exit fee, these companies have now started to repay up to £200 each to hundreds of thousands of homeowners after being unable to justify the steep rise in fees over recent years.

For mortgage companies this will mean payouts amounting to millions of pounds, as they repay the unfair fees that many customers have been hit by.

The Financial Services Authority reported on the matter last month, and the mortgage companies were given a deadline by which to justify their exit fees. However, instead the majority of mortgage lenders have decided to reduce their exit fees and to repay any consumers that have already been hit by the extortionate fees. Customers began to make claims after the FSA's announcement last month, so many banks have already started the repayment process.

A series of hikes over recent years have seen the exit fees from mortgage lenders double in some cases, with some consumers finding that the fee was one hundred percent higher than when they took out their original contract. Mortgage companies have now been told that if they must reduce their fees if they have not already been satisfactorily justified. The vast majority of lenders have opted to reduce fees, with none of them arguing with the FSA.

One FSA spokesperson stated: 'Certainly the impression we are getting as we go through the responses is that most lenders have gone for the original mortgage exit fee option.'

He stated that no lender had as yet refused to lower their fees. A number of mortgage companies have already put aside funds that are now earmarked for repayment of exit fees to those that have been overcharged.

Tom Smith
9th March 2007