Banks slammed over fees

Posted: 09 Jul 2007 10:26:39 GMT

Britain's banks have been slammed for hitting mortgage holders with high fees just days after the Bank of England increased interest rates.

Britain's banks have been slammed for hitting mortgage holders with high fees just days after the Bank of England increased interest rates.

Borrowers are already fearing the worst following the fifth rate rise in 12 months which took the base rate to a six-year high of 5.75 per cent.

Now many banks have decided to deal another blow to borrowers who want to fix their mortgages by charging around £5,000 as an arrangement fee.

The fee goes towards administration costs but many industry figures have attacked the banks for dramatically increasing the amount charged in recent years.

According to financial research website Moneyfacts, the average fee in 2001 was just £295, while today it is almost £1,000.

However, a number of banks set the fee as a percentage of the mortgage, with some charging 3.5 per cent, meaning that a borrower with a £150,000 mortgage would be stung for £5,250.

Current homeowners are likely to be unhappy with the fees and first-time buyers may be put off entering the market.

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