26 Apr 2024

Mortgage fees rise as rates fall

Moneyfacts research reveals that whilst mortgage interest rates are falling and higher loan-to-values (LTVs) are making a comeback, potential savings are being eaten away by the less talked about, rising fees.

The average mortgage fee has risen by £112 since the start of the year and, at £1,522, is the highest recorded by Moneyfacts in 25 years.

The rise is in direct correlation to the celebrated recent return of higher LTVs and widely published fall in interest rates.

Average fees across all mortgages
Jan-13	£1,410
Feb-13	£1,436
Mar-13	£1,412
Apr-13	£1,522
Source: Moneyfacts.co.uk

Average 2 YR Fixed Mortgage
	90% LTV	90% LTV fee	75% LTV	75% LTV fee	60% LTV	60% LTV fee
Jan-13	5.12%	£921	3.98%	£1,531	3.95%	£1,694
Feb-13	4.75%	£934	3.91%	£1,583	3.85%	£1,694
Mar-13	4.61%	£945	3.62%	£1,539	3.59%	£1,727
Apr-13	4.59%	£1,423	3.50%	£1,736	3.50%	£1,692
Source: Moneyfacts.co.uk

Average 5 YR Fixed Mortgage
	90% LTV	90% LTV fee	75% LTV	75% LTV fee	60% LTV	60% LTV fee
Jan-13	4.27%	£929	4.47%	£964	4.26%	£1,364
Feb-13	5.10%	£933	3.70%	£981	3.47%	£1,447
Mar-13	4.96%	£746	3.62%	£940	3.27%	£1,479
Apr-13	4.94%	£1,433	3.54%	£1,258	3.22%	£1,268
Source: Moneyfacts.co.uk

Sylvia Waycot, Editor at Moneyfacts.co.uk, said:

“It’s easy to get caught up in the excitement of heavily marketed mortgages that shout about low interest rates, but beware that they will often be at the expense of high fees.

“The average fees charged have risen by almost 8% since January, though it is hard to justify how setting up costs can possibly have risen by this much.

“Mortgage lenders that are enjoying cheap funding for lending, courtesy of the Government, must be seen to be opening up the market to new borrowers and reducing rates will help with this message.

“Rates are only a part of the story; high upfront charges such as fees can easily be overlooked and yet their impact across the life of the mortgage can turn a cheap deal into a costly one and therefore should always be considered.

“If the Government is serous about re-kindling the mortgage market with its Funding for Lending Scheme, it should ensure all its subscribed lenders offer mortgages that exclude hiked up charges that are hidden behind low rates.”

Moneyfacts Group

Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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