Homebuyers' complaints against mortgage lenders rose by more than half last year, the industry watchdog said.

The number of complaints about mortgages surged by 55%, a report by the Financial Ombudsman Service has revealed.

Altogether, the watchdog said it dealt with 3,876 complaints about mortgages in the year to the end of March, compared with 2,499 in the previous 12 month period.

Rate anger

Endowment mortgages were the cause of the most complaints, attracting more dissatisfaction than any other financial product.

Falling interest rates give rise to new problems

The number of complaints about endowment mortgages was, at 14,595, 60% more than in the year before.

Personal pensions ranked second in the dissatisfaction league, attracting 5,881 complaints, 75% up over the year.

But low interest rates have given rise to new concerns among home-buyers.

Many mortgage complaints arose when lenders cut their standard variable mortgage rate, but failed to feed the benefits through to existing borrowers, the ombudsman said.

While the Bank of England cut interest rates to a 40-year low in several steps last year, mortgage holders have raised a series of concerns that they have not seen the full benefit of the drops.

Lenders rapped

The Nationwide has agreed to refund 400,000 borrowers, who were charged a higher rates, a total of �90m, following an investigation by the ombudsman.

Halifax withdrew its new standard variable rate after a probe.

An inquiry into Abbey National's policies on so-called dual band mortgages are the subject of a case which has not yet been decided.

The ombudsman received 575 complaints about dual-band mortgages.

Complaints about the payment of early redemption charges on fixed-rate and discount-rate mortgages also increased.

Most complaints about endowment mortgages came from people who said they had not been fully warned of risks involved.

Endowment mortgages were popular during the 1980s and 1990s, in the days of booming stock markets.

But there is a risk to buyers that the money they accumulate through their endowment policies proves insufficient to pay off their mortgages.