B&B initiative is good for clients as well as taxpayers

I was interested to read Alan Cleary\'s comments (Mortgage Strategy January 19) about Mortgage Express\' amnesty on early repayment charges and would like to respond.

Since nationalisation, Bradford & Bingley’s objective has been to reduce its mortgage book in a way that protects the interests of taxpayers.

That is why we are undertaking a variety of initiatives to encourage redemptions and why we are not looking to offload assets at significantly below their value.

I should also point out a couple of factual inaccuracies in Cleary’s comments. As a mainly specialist lender MEX has repayment charges significantly in excess of his quoted 1% to 2%. Indeed, the majority of ERCs payable on our recent business are in the region of 5%, making this a sizeable concession.

We also have a considerable amount of evidence that some customers would irrationally prefer to sit out a 10% or 20% fall in house prices than pay a 5% ERC.

Our initiative allows all clients – not just those with deals maturing between now and June 30 as stated in the article – to take advantage of lower remortgage deals where they are available.

It also allows borrowers who wish to sell their properties or make significant capital repayments to do so without having to pay high ERCs.

We are in the fortunate position of knowing the make up of our mortgage book and while Cleary is correct in saying some customers will find remortgaging difficult, in a book of some £40bn there are still a large number of clients with equity available – and there are decent savings to be made by those who use good brokers.

One group of customers for whom this could be particularly attractive are those who have lifetime mortgages, because there are some attractive deals available due to reducing long-term swap rates.

Fortunately Cleary’s opinion of this exercise as “ridiculous” is not shared by the borrowers at whom it is aimed.

Feedback from our customers has been positive and our process of referring clients back to their original brokers has also been well received by the intermediary sector.

Andy Wiggans

Head of Customer Management

Bradford & Bingley

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