Abbey break new territory in terms of fixed fees

Commenting on the fixed mortgage fees for the new ‘fix and flex’ products introduced by Abbey, Louise Cuming, head of mortgages at moneysupermarket.com, said: “Abbey is breaking new territory in terms of fixed fees. For mortgages over £500,000 you would just get £1 change from £10,000 - although this fee might seem mouth-wateringly high at first glance, the fact it is fixed makes it wholly transparent, and sometimes less expensive than a percentage based fee.

“Abbey should be congratulated for being open about the fees it charges. Most lenders ‘mask’ high fees by quoting percentage rates. When looked at in percentage terms the Abbey deal represents a two per cent fee on a £500,000 mortgage and a 1.33 per cent fee on the maximum mortgage of £750,000. This starts to look like a reasonable deal when compared with other products on the market such as Northern Rock which charges a 3.5 per cent fee for its fixed rate deal. This works out as a whopping £26,250 fee for £750,000 mortgage.

“It is also worth highlighting the borrowing limit set for this offer of £750,000 - yet another indication lenders want to steer clear of riskier lending such as much larger loans while the credit crunch plays out.”