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07 November 2014

Godfrey Blight

Fees and charges: savvy not sneaky

Most people see choice as a good thing: you get a choice on which supermarket to shop in, where to go on holiday, what to wear in the morning. You decide.

But when it comes to getting a mortgage consumer organisation Which? claims it isn’t always so easy to make a decision, with scores of products available, meaning that customers are getting caught out by ‘sneaky’ and ‘unclear’ fees and charges.

It says borrowers face more than 40 different fees and charges, making it hard to calculate actual costs over the lifetime of a mortgage.

Borrowers may have to do their homework before signing on the dotted line, as should anyone entering into a financial contract, but to say charges are hidden from customers – key to the argument Which? makes – is simply not true. In our heavily regulated industry, the costs of mortgage charges and administration fees are already available to consumers, so there’s no need to disclose ‘sneaky’ fees as there’s no case to answer.

The truth of the matter is that arrangement fees subsidise mortgage rates and go into the margin mix for the lender. This means the borrower gets a good rate in return and, with many lenders no longer insisting on extended redemption penalties, the customer gets to walk away at the end of the fix or discounted period.

And let’s not forget, higher fees are more commonly attached to mortgages with lower rates that tend to be longer, less risky and at a fixed rate. Without arrangement fees, we could be looking at potentially higher costs overall and almost certainly a longer period of redemption penalties.

Providers must keep understanding their customers and the market. Offering more products to match customers, with real flexibility and low rates attracts – and keeps – borrowers who are looking for good deals.

We all want healthy competition in the mortgage sector and providers must continue to do all they can to make their offers simple and easy to understand.

Note to self: always read the small print.

Photo of Godfrey Blight

Godfrey Blight

Director, Capita Mortgage Services

Godfrey joined the team in October 2013, and has almost 30 years experience in the mortgage industry. Godfrey joined Private Label Mortgage Services Ltd as Head of Sales at launch in 1987; he became Sales Director in 1988 and was appointed Managing Director in 1992. Following the acquisition of Private Label by GMAC-RFC in 1998 and the integration with RFC-MSL in July 2000, Godfrey was appointed Sales Director and then subsequently Managing Director, Sales & Marketing for GMAC-RFC. He was also chairman of IMLA in 2008. Most recently Godfrey was a director at Squarehill Risk Services, a specialist risk mitigation consultancy.

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