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Mortgage fees rise by 17% in a year

Mortgage fees rise by 17% in a year

Category: Mortgages

Updated: 17/08/2011
First Published: 17/08/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The average mortgage arrangement fee has increased by some 17% over the last 12 months, research by Moneyfacts.co.uk has revealed.

It means that people paying the fees have seen an average hike of just over £150 in the last year alone.

Indeed, in August 2010, the average mortgage arrangement fee was £879; today that figure stands at £1,030.

But many people looking to secure their mortgage could face forking our far more.

The highest fee on the market is an eye-watering £3,800, which is being charged by Accord Mortgages (through selected intermediaries).

And the lender with the dubious honour of charging the highest percentage arrangement fee is Precise Mortgages at 2.00%.

There are some mortgages that can be snapped up that don't charge an arrangement fee but they are very much at a premium, with only 12% offering this luxury.

"Lenders appear to be offsetting the low mortgage rates on offer by increasing the arrangement fees," commented Michelle Slade, spokesperson for Moneyfacts.co.uk.

"The average arrangement fee has increased by 17% as lenders battle it out to offer the lowest headline rate.

"Percentage fees have become increasingly common, with one lender charging as much as 2%.

"Unfortunately too many borrowers still focus their initial attention on getting the best rate, without taking full consideration of the true cost of the deal.

"In many cases a low rate with a high fee can work out more expensive than opting for a slightly higher rate, but with a lower fee.

"12% of mortgages charge no arrangement fee and many of these regularly appear in the Moneyfacts best buy tables, which are based on true cost.

"With 2,873 mortgages available there is a raft of rate/fee combinations for borrowers to consider.

"The key to deciphering the maze of thousands of mortgages and getting the best deal is for borrowers to do their homework and shop around."

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