The trade body argues that borrowers must recognise the distinction between fees or charges relating to administrative costs, and other fees that form a core part of the pricing of the individual mortgage product on offer.
In its News & Views newsletter, the CML said: “Lenders may offer a variety of different mortgages, some of which combine a higher rate with a lower fee, with others that have a lower rate and higher fee.
“The benefit of offering some mortgages with fees and some without, and with fees at different levels, is that different customers can choose the combination that best suits their needs and preferences. Various regulations exist to protect consumers, and ensure that they can compare different mortgages on price, even if their fees and charges differ.”
These include the APR (annual percentage rate of charge) and the Key Facts Illustration.
The CML added: “As long as lenders comply with these rules that make all the costs transparent, consumers benefit. They get a choice of different mortgages, and can decide what combination of rate and fee they prefer. They get a highly detailed description of all the costs and characteristics of the mortgage they plan to apply for before they are committed to it.”
Stuart Gregory, director at Lentune Mortgage Consultancy said the BBC investigation could be on the back off a shift in transaction levels, with lenders having to make up the cost.
Gregory said: “For example, booking fees, which didn’t really exist during the timescale when there were a lot of deals around in the market, lenders have had to get some income on the work their doing. In that respect, booking fees are more prevalent as a result of there being fewer mortgage transactions.”
He added that consumers also need more awareness on all the deals available on the market.
“If a first-time buyer was looking at a best buy table in a newspaper, nine times out of 10 the deals which are published are either paid for advertising, or deals with the lowest rates, but highest fee attached. If consumers go through a broker, they would compare all the rates on offer to see which deal is best for the client.“
