According to figures from ING Direct and Moneyfacts the weighted average value of exit fees was £187.37, with 11,704,000 mortgages with balances outstanding at the end of 2006.
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This followed recent concerns raised by the Financial Services Authority about exit fees increasing during the mortgage term, and in a statement issued in January it issued guidance that fees must reflect the cost of the service to the lender.
Buyers too have become dissatisfied with exit fees and what has been deemed as unrealistic charges, the study suggested. Almost half of those surveyed stated that it was wrong for providers to mark-up fees, while 54 per cent urged lenders to be more open and transparent about the charges.
ING Direct calculated that lenders would charge £361 million for service during 2007.
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Lindsay Sinclair, ING Direct chief executive officer, said: “There is very little work involved for the lender when a customer wants to redeem their mortgage as the majority of the paperwork is handled by their solicitor who makes a separate charge for this. It costs us just £35 and we chose to absorb this cost – anything above this is just another way to boost profits.”
Christopher Dean, spokesman for the Council of Mortgage Lenders, said: “You will find that some lenders will charge more than the standard rate and some will charge less, but lenders do need to justify their fees.”
