CAT standards

HM Treasury published its CAT (Charges, Access and Terms) standard for mortgages on 10 April 2000. The principle behind CAT mortgages was to identify simple mortgage products that did not contain any hidden shocks or complications for borrowers. They did not necessarily represent the best value for money and were not generally popular with borrowers, who were able to find cheaper deals either themselves or through brokers.  No further announcements were made by the Treasury and none is anticipated in the near future.

The main points to note in the standard are:

• Two standards - one for variable rate loans, one for fixed/capped loans.
• Interest must be calculated daily, with full credit given for all payments when made.
• No separate charges may be made for mortgage indemnity guarantees.
• All fees must be disclosed up-front.
• Borrowers pay no fees to brokers where a CAT product is selected.
• Variable rates may not exceed two per cent above Bank of England base (repo) rate.
• Maximum booking fee for fixed/capped loans is £150.
• Early repayments may be made at any time.
• No redemption charge on variable rate CATs; maximum redemption for fixed/capped CATs is one per cent of the loan outstanding for each remaining year of the fix.
• CATs must be fully portable, provided the lender accepts the new property.
• Borrowers may choose repayment dates, between 1st and 28th of month.
• No tie-ins allowed.
• Borrowers in arrears pay interest on the outstanding debt at the normal rate - no punitive rates allowed.