moneysupermarket.com: Mortgage Exit Administration Fees

Louise Cuming, head of mortgages at price comparison website moneysupermarket.com, said: “We have yet to see a flurry of activity from lenders despite the FSA's warning it is less likely to take action against those who publish their strategy on Mortgage Exit Administration Fees (MEAFs) by July 31.

"Not all lenders are playing ball with the FSA, but instead are sidestepping its recommendations. We are already seeing BIM avoid the clampdown by creating a new charge, the ‘core fee’. This has two upsides for the lender and none for the consumer. Lenders with a new core fee are allowed to say they don't charge an exit fee and they can charge the fee upfront. If they add the fee to the mortgage it has the added impact of attracting interest.

"New charges will hit the consumer hard at a time when mortgages are becoming less affordable, yet the lender could use the ‘spin’ of marketing a ‘no exit fee’ approach.

“It is clear if mortgage exit administration fees are reduced or abolished, lenders will simply replace the income stream elsewhere with increased interest rates, raised fees or new ones.

“Transparency is the key to informed customer choice. If consumers are aware of the lender’s process in relation to MEAFs they can then make an informed choice before making a commitment to apply."