Lenders should innovate rather than charge high fees

From Wesley Davidson

Why has almost every buy-to-let lender decided to charge fixed rate 1% and 1.5% fees? It seems there is a ‘low rate, high fee’ bandwagon on the move. The Mortgage Works started the wagon rolling and since then lenders have jumped on it in droves.

In most cases I have brokered I have found that products with a slightly higher rate but with a lower fee have, over the fixed rate period, been considerably cheaper for clients.

For the sake of competition it would be good to see some fresh ideas rather than the same old product pricing strategies.

I have been especially pleased with MT Select. Telling clients they can have a good rate at a reasonable fee is popular. This, coupled with minimal packaging requirements and efficient processing, makes these products a breath of fresh air.

I also wonder if from the clients’ point of view, having to pay a fee to the consultant for advice and then a 1.5% fee to the lender looks costly, especially as the concept is new. Many clients coming back to their brokers to remortgage their buy-to-let deals will be in for a shock.

Lenders should increase competition through innovative ideas rather than jumping on the high fees bandwagon.