Cost Of Mortgage Deals Rise Year On Year | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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 It is now over 6 months old so the content may be out of date.

Derin Clark

Derin Clark

Online Reporter
Published: 21/06/2021

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 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, 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%.

Mortgage rates rising

Despite the increase in mortgage lenders offering deals with an interest rate below 1%, the average rates on mortgage deals with and without a fee has actually risen since April. The average rate on deals with a fee has increased from 2.92% in April to 3.08% this month, while the average rate on deals with no fee has risen from 2.79% to 2.87% during this same period.

“Borrowers may be disappointed to see that average fixed rates have continued to rise of late, but overall, this may be attributable to the return of traditionally higher rated, higher loan-to-value (LTV) products,” explained Williams. “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. The average rate on a deal without a fee is 0.19% lower than in June 2019, so those who are looking to secure a new mortgage may wish to consider acting swiftly, especially considering that both the average rate for deals with a fee and those without a fee rose by 0.16% and 0.08% respectively over just the last two months.

“It is a pleasant surprise to see stability over the past two years in the proportion of fixed deals that offer incentives, which may suggest lenders are still working hard to offer an array of products to entice customers. Therefore, despite increases to rates and fees alike, there are clearly still great deals out there for borrowers to consider. 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.”


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