According to Moneyfacts’ research into mortgage product fees and incentives, the average product fee for a fixed rate deal – excluding no-fee products – has fallen by £11 since March last year but has remained above £1,000 since July 2017.
The proportion of mortgage deals with no product fee has also gradually been falling over the past five years, going from 41% of the fixed rate mortgage market in 2020 to 36% currently.
Looking further into mortgage product fees and incentives, mortgage products with free or refunded legal fees have also been declining, going from 49% in 2020 to 42% in 2025.
The proportion of deals with free or refunded cashback stayed roughly stable, varying from 72% to 75%.
Mortgage deals with cashback made up 22% of the fixed rate mortgage market, a decrease from 31% in 2020.
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The report noted that the average mortgage rate for a deal with a fee stood at 5.31%. This is a drop from 5.57% in the same period last year but more than double the 2.49% figure from March 2020.
The average mortgage rate for products with no fee came to 5.41%, which is down from 5.59% in March last year, but an increase from 2.66% in 2020.
Borrowers urged to check mortgage product fees and other costs
Rachel Springall, finance expert at Moneyfactscompare.co.uk, explained that borrowers who locked in to a cheap fixed rate in 2020 and are looking to refinance will find that mortgage product fees have gone up.
“Outside of headline-grabbing low rates, borrowers need to check the overall cost of any mortgage, which includes any fees or cost-saving incentives. The best deal depends on someone’s circumstances and how much they need to borrow; someone with a larger debt would typically chase a lower rate, whereas those looking to avoid upfront costs would consider fee-free deals and incentives.
“The lowest fixed mortgages on the market typically charge upfront fees of around £1,000, or even up to £2,000, so a mortgage with a slightly higher initial fixed rate and lower product fee could be a better choice,” she said.
Springall said deeper analysis of the availability of mortgage product fees and incentives showed a “proportional decline” in the quantity of deals that do not charge a product fee, along with those that pay cashback.
“Borrowers coming off a fixed deal may have to face higher mortgage rates this year, but they can still find an abundance of deals with cost-saving incentives, and it’s still cheaper to refinance onto a fixed rate than reverting onto a standard variable rate (SVR).
“More often than not, borrowers can find a deal with a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees. Those looking to remortgage will likely want to keep costs down and refinance without too much effort, so mortgage bundles are a great choice to avoid the worries of covering upfront fees.
“First-time buyers may also have exhausted all their disposable cash on a deposit, removal and furnishing costs, so a cashback deal with a bundle of incentives could be ideal. Lenders could also add upfront [mortgage product] fees to the mortgage advance, so it’s wise for borrowers to seek advice to navigate all the options available to them before they commit,” she said.