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%.