The average mortgage fee has hit its highest point in over five years, according to Moneyfacts.

The financial information provider said that fees are up £15 over the last two months alone to reach an average £1,005.

Borrowers haven’t had to pay this much money for their mortgage to be arranged since July 2013.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Providers are currently fighting among themselves to be seen as the lender offering the lowest rate on the market, all in a bid to attract borrowers who are considering remortgaging after the recent rate rise by the Bank of England.

“However, the increase in the average fee is in direct response to these rate cuts, as lenders try and compensate these deals.”

Know the true cost

Moneyfacts warned borrowers to be careful when comparing costs of borrowing and to remember that the cost of mortgage fees can add up, especially if you remortgage every two years. In addition you need to understand the true cost of a deal. The lowest rate might look attractive but if it comes with a high fee, it may not be the cheapest overall deal for you. In fact you could be better off with a slightly higher interest rate if the fee is lower.

Nelson explained: “While these low-rate deals look great on paper, the hefty fee that goes alongside them can mean that what appears to be a cheap offer, may in reality be a much costlier one. For example, based on the lowest rates available at 60% loan-to-value (LTV), opting for the lowest rate mortgage without a fee would make a borrower £577.02 better off than opting for the cheapest rate in the market alone.”