Mortgage rates may be on the rise but it’s not all bad news for borrowers as they can still find an abundance of options to help them save on the upfront cost of their deal. Mortgage fees have fallen on average on fixed deals, and there are now more fee-free offers available. Weighing up a deal on its true cost is vital, particularly as the rate gap between average fixed rates with a product fee and those without has reduced.
Due to the changes in the mortgage landscape borrowers may find themselves better off by looking beyond headline-grabbing fixed initial rates, especially as interest rates continue to rise. Indeed, back in September 2021, there were various lenders offering sub-1% mortgage deals, but that same month the average mortgage fee was just £16 shy of the record high recorded in 2012. Low rate fixed mortgages can carry some of the highest fees, so they may not be the best choice for every borrower, so seeking independent advice to assess the overall deal is wise.
Remortgage customers could stand to make substantial savings by switching their mortgage, and those who may be cash-strapped can find fee-free offers as well as deals that cover their legal fees, valuation or even pay cashback to help with upfront costs. First-time buyers can also stand to benefit from these incentives if they have exhausted their savings.
In the months ahead, it will be interesting to see how mortgage lenders will adapt their ranges to appeal to both new borrowers and their existing customers during the cost of living crisis.
