Lenders are 'just protecting their margins'

Date:Tuesday 8th September 2009
Author: Max Freedman

Lenders are using higher fees on fixed-rate mortgages to maintain their profit margins, according to an industry analyst.

Andy Pratt, chief operating officer of Alexander Hall, noted that percentage fees had never been a good way to win over customers as people have to pay more the larger their loan is.

His comments were made following the publication of research by MoneyExpert.com which indicated that 49 per cent of fixed mortgages charge a percentage fee, which is up from 43 per cent a year ago.

He said: "The lenders that are out there – mainly the banks – are doing everything that they can and it is basically just another way of increasing or protecting their margin."

Mr Pratt claimed that banks and building societies have got a limited amount of money to lend at the moment, so they want to pick the borrowers who have the least risk associated with them.

This is done by pricing products so that those clients will be able to take on their products, he pointed out.