The contentious issue of mortgage levies has become highlighted since the economic crisis has caused a huge rise in the number of homeowners struggling to pay their mortgage and falling into arrears.

Northern Rock, which is completely nationalised, charges customers who are three months in arrears up to £55 a month, or £25 a month if two payments have been missed, and reportedly rakes in as much as £1million a month in arrears charges.

Those with Bradford & Bingley mortgages, which were nationalised last year, charges £25 a month from the minute a borrower falls one month into arrears.

Debt charities and other critics of the mortgage levies argue that they put unnecessary additional pressure on homeowners who are already struggling to make ends meet, illustrated by the fact that they cannot keep up with their mortgage payments.

Following the criticism, both lenders have told The Times that their charges are under review. Bradford & Bingley says it is likely to “improve” its penalty structure to better support the interests of its customers.

“These charges from lenders owned by the taxpayer have the effect of pouring salt into the wound, compounding the problem for families unable to make their mortgage payments.” Chris Tapp of debt charity CreditAction told The Times. “The logic seems warped.”

The majority of mortgage lenders charge their customers for falling into arrears, which they say is to cover the administration costs involved when a borrower falls into arrears.

A report from The Financial Services Authority on mortgage arrears charges expected in May.

© Fair Investment Company Ltd