Lenders have been criticised for profiting from borrowers by continuing to charge high mortgage indemnity guarantee insurance fees.
MIG, High Lending Fees or Mortgage Indemnity Payments provide lenders with an insurance if the customer defaults on the loan, but unlike other insurance policies the customer paying does not receive any additional benefit.
David Bitner, technical spokesman for The Marketplace at Bradford & Bingley, says: “The cost of MIG insurance at the same level as it was in the early 1990s when there were problems with defaults.
“With repossessions at a record low, that should transfer to lower costs in MIG insurance for lenders. If the costs have been saved then surely the consumer should benefit from the reduction in MIG premiums. Some lenders are relying on the fact that their existing customer base won't shop around to make themselves a bigger profit.”
Halifax, Abbey National, Woolwich, NatWest, Bristol &West and Bank of Ireland are among lenders that still charge MIG.
Maurice Edgington, chief executive, e-mortgage-uk, says: “There's no justification for charging MIG at all. It holds no benefit to the customer whatsoever. It is just about the lender covering themselves at someone else's expense.
“If you have got to decide between a lender that does charge against one that doesn't, then competition may filter it out of the market.”