Rise in the number of fee-free mortgage deals
The number of fee-free deals available to those looking for a fixed rate mortgage has more than doubled over the past year, according to Moneyfacts.
The financial information provider said this has given borrowers looking to minimise upfront costs even more choice.
A year ago there were 556 fee-free fixed rate deals, compared to 1,162 today.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “It’s great news that the number of fixed rate deals without a fee has increased by a staggering 606 products. With more deals now than ever offering a no-fee option, it is clear to see that lenders are trying to compete in ways beyond just the headline rate.”
At the same time as the number of fixed rate deals with no fee has increased, Moneyfacts noted that the average fixed rate fee has increased too, rising from £954 to £984 over one year.
“This is mainly an attempt by providers to compensate some of their low rate deals with a higher fee,” explained Nelson, “particularly as the average two-year fixed rate has fallen from 2.67% to 2.34% in the last 12 months.
“Fees can soon mount up, particularly if a borrower opts for a two-year deal and remortgages after the deal expires. This can make ignoring fee-free options a costly mistake, as the amount paid on the fee could instead be better spent overpaying the mortgage.
“It is important that borrowers looking for a mortgage ensure they do their homework and work out the true cost of a deal, looking at the rate, fee and any incentive package, so they can be sure they have found the most cost-effective option.”