The Financial Services Authority (FSA) had set a deadline for lenders to justify their exit fees. However, this date has passed and there has been little improvement in the fees charged.
Most lenders were opting to leave the charges at their current rate and offer a refund for borrowers who have paid higher fees in the past. Several lenders have actually reduced the exit fee; among them are Skipton, West Bromwich and Portman Building Societies.
Our view
Whilst it may be unpalatable to charge excess fees, people go into a mortgage contract knowing what the exit penalties are. You cannot lock into a fantastic interest rate offer at the time of taking out the mortgage and then expect to just walk away from the deal when you feel like it without charge. There is a balance here between commercial decisions and fairness to a client. If you do not like the penalties, do not take out the mortgage. For a change, we believe the Financial Services Authority (FSA) is wrong in their stance on this one and their move will damage competitive mortgage rate offerings.