Barclays is the latest lender to revisit the fees it charges customers who redeem their loans early.
In consultation with the Consumers’ Association as part of its Fair Mortgage Campaign, from September 2000 Barclays will offer four options to its customers whose fixed rate mortgages have variable early repayment charge terms.
These will be:
l A variable early repayment fee capped at 9% of the amount repaid.
l A fixed early repayment charge in line with CAT standards (a fixed percentage of the amount repaid).
l For the 75% of Barclays clients where it is likely to be preferable to switch to an alternative Barclays mortgage product, they can do so with no early redemption penalty.
l For the remaining fixed rate clients where it will not be preferable to switch products, the bank and Consumers’ Association will work together to establish the most suitable option.
In the interim, any customer wishing to redeem in full or in part their fixed rate mortgage will be charged a fee capped at 9% of the amount being repaid.
New fixed rate customers will also be offered the choice between a capped variable charge or a fixed CAT-compliant charge.
John King, managing director of mortgages, general insurance, life and pensions at Barclays, said: “While we have always held the view that the variable method is the fairest way to calculate early repayment charges, we recognise clients’ need for greater certainty when committing to a fixed rate mortgage.
“We also support increased transparency and information to assist them in making informed choices.”
The move follows the decision by NatWest in December last year to cap its redemption fees on its fixed rate deals following complaints from the Consumers’ Association, the Office of Fair Trading and BBC’s Watchdog.