Mortgage News

The cost of mortgage deals has risen year-on-year, as the average product fee has increased while the percentage of the market offering fee-free deals has fallen.

Research carried out by Moneyfacts.co.uk found that the average product fee on mortgage deals has increased by £57, up from £1,018 in June 2020 to £1,075. Meanwhile, the percentage of the market offering fee-free deals has fallen by 5% year-on-year, down from 40% in June 2020 to 35% this month.

Commenting on the possible reason for this year-on-year change, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Lenders may be raising fees to gain margins in the aftermath of a fixed rate war, and this may also potentially be linked to the resurgence of sub-1% mortgages as, whilst eye-catchingly low, these initial rates can also carry the highest fees. Borrowers may then 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.”

Despite the research showing that year-on-year the average cost of mortgage fees has increased, the last two months have seen a fall in average product fees. In April, the average product fee stood at £1,081 - £6 higher than this month. As well as this, the percentage of the market offering fee-free deals was 34%, compared to this month’s 35%.

This week has seen a number of changes take place within the mortgage charts. At the top of the charts new, lower rates are available on three and five year fixed rate remortgage and moving home charts, as well as new lower rates available in the two and five year first-time buyer charts. Further down the charts, there were several changes including TSB reducing selected fixed rates by up to 0.15%. As well as Virgin Money reducing selected fixed rates by up to 0.25% and launching new two year fixed rates via mortgage brokers and a new Mortgage Guarantee Scheme three year fixed rate deal.

Below we have highlighted the lowest rates available across the mortgage charts this week, but those looking for a mortgage deal should be aware that the lowest rate may not be the best option for them. Instead, when looking at deals borrowers should take into account all aspects of the deal, including the product fee and incentives, as these can significantly impact the overall cost of the mortgage. Those who are unsure of which deal is best for them should speak to a broker who will be able to provide help and advice on choosing the best deal.

Comparing some of the most competitive lifetime mortgage rates month-on-month reveals that a number of rates have fallen during June. This, combined with rising house prices, makes equity release highly attractive to homeowners aged over the age of 55 looking to release equity from their home. Saying this, equity release still has a long-term impact on finances, especially on the inheritance the borrower leaves to loved ones, and as a result those considering equity release should speak to an independent financial advisor first to make sure it is the right decision for their personal circumstances.

The plans highlighted below are not endorsed by Moneyfacts.co.uk but have been chosen as they offer competitive rates for the scenario that we have selected. It should be noted that other plans are available that offer similar competitive rates but may offer incentives, such as cashback, that suit the borrower’s needs better – as such borrowers should speak to an equity release broker who will be able to select the best plans for individual requirements.

The Moneyfacts.co.uk Pick of the Week showcases the best of the latest products or rate changes to hit the consumer finance market