Skipton has told brokers that new clients must stump up a £799 fee to apply for its SVR mortgages.
The lender says the fee is payable on completion and can be added to the mortgage account on completion.
Skipton says that with many other lenders charging fees well in excess of £1,000, its SVR fee is “relatively modest.”
Steve Aldous, general manager at Skipton, says: “There is significant coverage in the press today regarding our decision to put a £799 fee on our SVR for new borrowers. This is being reported as an unusual step as the commonly held belief is that SVR is not an option for new borrowers – who always prefer a product such as a fixed rate or tracker.
“Our SVR, which at 6.70% is one of the lowest in the market, has always been an option for new borrowers and an increasingly popular one in recent weeks.”
He adds: “This is hardly surprising when the alternatives available include an Abbey tracker product at 6.69% with a £999 fee and a Nationwide tracker product at 7.10% with a £599 fee.”
Aldos says that over recent weeks up to 15% of Skipton’s new lending has been on SVR deals. This is an increase on previous levels of under 5%.
He adds: “With no Early Repayment Charge our SVR can be misused as a holding vehicle, with borrowers and brokers switching to a better deal as soon as one becomes available. Clearly this is something we’d rather not encourage.”