Mortgage arrangement fees on fixed rate deals top £1,000
Mortgage fees on fixed rate deals are rising, and have rocketed to their highest level since August 2013, according to Moneyfacts.
The financial information provider said that despite record low mortgage rates, particularly in the fixed rate sector, associated fees are not following the same pattern.
In 2013 the average fixed mortgage fee was £886, but it has steadily risen to £1,018 today, said Moneyfacts.
Finance expert at the organisation Charlotte Nelson, said: “With borrowers being told to switch to a low fixed rate mortgage for some time now, the increase in the average fee to over £1,000 and the highest point in four years is disappointing news. So, while rates remain at record lows, these are being compensated in part by larger arrangement fees.
“Some of the lowest deals on the market have fees of around £2,000, and some borrowers are being asked for even more, with the largest fee on a fixed rate mortgage sitting just shy of £4,000 (on a deal for professionals only). As fees vary wildly even within just one provider’s mortgage range, it leaves many borrowers questioning what they are for and what they would gain from paying extra in fees.”
The impact of such large fees means that the new lower rate mortgage deals on the market might not be as cost-effective as their headline-grabbing rates might suggest, so it is important that borrowers understand the total cost of any mortgage, including interest rates and fees.
Nelson explained: “Those savvy borrowers heeding the advice to remortgage could find that moving deals can be a costly affair, especially if their preference is for shorter-term fixed rates. Therefore, with fees on the rise, it is more important than ever for borrowers to consider the true cost of a mortgage before obtaining a deal.”