National Counties Building Society is to remove the caps it places on procuration fees.
The size of the proc fees will remain the same but from 1 October the building society, which advanced £162.7m to mortgage customers in 2012, will no longer have a maximum fee on cases. The change applies to all of its products.
For one-year deals the lender will continue to pay a proc fee of 0.1 per cent of the loan value but, from 1 October, it will remove the £350 maximum proc fee.
For two-year products the fee will remain at 0.2 per cent and 0.25 for deals up to three-years. But the respective £700 and £875 caps will be removed.
For four-year products the fee is 0.3 per cent of loan value and five-year or longer deals pay 0.35 per cent. These will remain the same, hoever the respective £1,050 and £1,225 caps will be removed.
For example, a broker arranging a five-year fixed rate on a loan worth £100,000 would be paid £350, based on the 0.35 per cent proc fee. If the loan was £1m, the proc fee should be £3,500, however previously this would be capped at £1,225. But from 1 October the lender will pay the full £3,500 proc fee.
NCBS product development officer Emma Avery says: “This move to remove the broker fee cap is something that has been in the pipeline for a while, following feedback that we have received from the brokers we work with.”
The announcement comes a week after Countrywide financial services director Nigel Stockton called for lenders to increase the procuration fees paid to brokers and Mortgage Strategy revealed that Lloyds was to adopt a quality-based proc fee system from the start of next year.
Trinity Financial product and communications manager Aaron Strutt says: “There have been calls for procuration fees to be increased and it seems National Counties has taken note. Some buildings societies don’t pay a huge amount of commission but there are private banks that don’t pay at all.
“I am not sure many of the lenders will be keen to increase their proc fees as they expect brokers to charge their clients for arranging the mortgage.”