Buyers should beware the growing number of mortgage fees and find a good broker.
Mortgage fees on fixed-rate products have risen by 5.6% over the past year, with the average deal charging £1,075.
Meanwhile the percentage of the market where fixed-rate products are offered without a fee has shrunk by 5% over the same period to 35%.
That is the message from Moneyfacts.co.uk, which warns that lenders may be raising fees to gain margins in the aftermath of a fixed-rate war.
Its latest report warns this may also be linked to the resurgence of sub-1% mortgages as, while eye-catchingly low, these initial rates can also carry the highest fees.
“Borrowers may need to search a little harder if they are looking to keep mortgage costs to a minimum or secure a fixed rate mortgage without a fee,” says Eleanor Williams, finance expert at Moneyfacts.co.uk.
“Our latest data shows that current average fixed mortgage rates at all LTVs for deals with a fee (3.08%), and for those without a fee (2.87%), are both over 0.50% more than they were this time last year.”
Key findings include:
- At £1,075, the average fee currently charged on a fixed-rate mortgage deal (not including no-fee products) has increased by £57 year-on-year. However, it has fallen by £6 compared to April when it was £1,081, which was the highest on Moneyfacts records since November 2012 (£1,095).
- The proportion of the market offering fixed-rate mortgage deals that do not charge a fee has reduced from 40% in June 2020 to 35% at the start of this month.
“These changes strengthen the need for borrowers to secure the support and advice of a qualified broker who can help to assess the true cost of a deal, carefully looking into whether or not it is beneficial to pay a fee or to stomach a slightly higher initial rate and consider what, if any, incentives may be important for their customer,” adds Williams.
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