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The Financial Services Authority (FSA) have been investigating exit fees on mortgages, or Mortgage Exit Administration Fees (“MEAFs”), since September 2005. It has been looking at whether the recent increase in the level of the fees charged by some lenders are fair to consumers.

The fee is labeled as covering costs such as changing name on the registration of the property at the Land Registry, but many think that lenders are increasing them disproportionately so they can recoup money ‘lost’ by offering extremely cheap mortgage deals to new customers.

Many mortgage contracts will state that the lender may increase the exit fee during the life of the mortgage, however, this means that the variation must comply with the Unfair Terms in Consumer Contracts Regulations 1999. The FSA has stated that “a variation clause is less likely to be regarded as unfair if the variation can only be made with a ‘valid reason’ which is specified in the contract.”.

With many lenders increasing their exit fees drastically in recent years, many may find it difficult to justify the increases as being ‘fair’. For example, Cheltenham & Gloucested charged just £50 5 years ago, but now charge £225 – an increase of 350%.

This issue is exacerbated by the fact that since 2003 the Land Registry has kept deeds in an electronic form, actually reducing costs for lenders.

The FSA has given lenders that are under investigation a month to produce a response, providing evidence of why increases to MEAFs were made. They will report on the issue in the autumn.

The Council of Mortgage Lenders (CML) has released results for April this year that show fixed rate deals accounting for 71% of all loans for house purchase and remortgaging – 17% more than April 2005. It says fixed rate deals are currently popular due to attractive deals offered by lenders, and consumer’s desire to lock in to long-term low rate deals.

The CML also showed that first-time buyers are now borrowed higher multiples of their salaries to get on the property ladder, with an average multiple of 3.21 – up from 3.15 in March. However, it also found that mortgage payments as a proportion of income had actually fallen from 17% in June 2005 to 16.2% now.

CML Director General Michael Coogan said: “Today’s data confirms that the market is in good shape. The strong take-up of fixed-rate deals is encouraging because they give consumers confidence in their mortgage payments and allow them to plan ahead financially.

“It is also interesting to see that while both first-time buyers and movers are borrowing a greater multiple of their income to get a mortgage, their payments as a proportion of income are lower than in the same period last year. This is potentially due to the higher take-up of attractive fixed-rate products over the past year.”

Halifax has today released its results from May which show house prices rising by just 0.1% – the lowest monthly increase since the 0.2% fall in January this year.

The Halifax pointed to higher household bills and rising unemployment being likely to hold house prices in check for the remainder of 2006. Mortgage approvals for house buying fell in April for the second time in four months. April’s figure was 11% down on January’s.

The Bank of England’s Monetary Policy Committee (MPC) has today announced that the base rate will stay at 4.5% this month. The hold was widely expected, though many commentators believe the rate will rise at the end of 2006 or early 2007, to ensure inflation stays below the 2.0% target.

Minutes from the MPC’s meeting – released on 21st June – will show the current opinions of the MPC members.

Figures released by the Bank of England today showed that lending on properties had reached £999.2 billion by the end of April 06. April showed an increase of £8.5 billion in mortgage lending; identical to the average over the past 6 months. The number of new mortgages approved in April totalled 106,000, down by 8,000 from March.

Since the total mortgage lending figure at the end of April was a mere £0.8 billion short of the trillion pound mark, then given the average increase for the past 6 months, it is likely that total mortgage lending rose to over £1 trillion early in May.

The Council of Mortgage Lenders (CML) sees the release as being indicative of the rise in people owning their own homes – rising from 60% to 70% of the population in the last 20 years. Talking about the £1 trillion mark, the CML’s Michael Coogan said, “Although it is a milestone, it will perhaps soon be forgotten as home-ownership and mortgage lending continue to grow further”.