Derin Clark

Derin Clark

Online Reporter
Published: 02/12/2019

Consumers can not only get a better fixed mortgage rate today compared to a year ago, but the number of products charging a fee has fallen as well.

Research carried out by Moneyfacts.co.uk found that product fees across fixed deals, on average, have fallen to £1,022 compared to £1,047 in December 2018. As well as this, the number of mortgage deals that offer a free or refunded valuation has increased from 2,889 in December 2018 to 2,897 today. Saying this, it is not all good news for consumers, as the number of deals charging no product fees at all have fallen to 2,078, compared to 1,817 available a year ago, while the number of deals offering free or refunded legal fees have also decreased from 2,167 available a year ago to 2,078 available today.

Fixed mortgage deal analysis Dec-18 Dec-19
Average product fee £1,047 £1,022
Deals with no product fee 1,817 (42%) 1,715 (41%)
Deals with free/refunded legal fees 2,167 (50%) 2,078 (50%)
Deals with a free/refunded valuation 2,889 (67%) 2,897 (69%)

The % shown is the proportion of deals out of the fixed mortgage market 

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Lenders may well be cutting fixed rates to enticing lows, but not all borrowers will be drawn in by the initial rate alone. Indeed, there could be borrowers who want to save on the upfront cost of the deal, such as with product fees or paying out on other fundamentals.

“Remortgage customers, in particular, may be considering a new deal if they are on a variable rate because of the fixed mortgage rate war. It is entirely possible that these same borrowers are looking to switch from their current lender. They may then wish to avoid paying hundreds of pounds in the run-up to Christmas to pay fees to secure a new mortgage deal, whether it be a product fee, instructing a valuation or appointing a solicitor. First-time buyers can also benefit from this type of bundle too.

“It’s encouraging to see growth in the proportion of fixed mortgage deals that offer a free valuation, however borrowers must keep in mind that this is usually a basic valuation compared to if they were to instruct their own surveyor for a more comprehensive estimate.

“At the same time, while half of the fixed mortgage market offer free legal fees, some borrowers may feel more comfortable to appoint their own solicitor. However, by using an incentive bundle, these separate costs can be saved.

“Weighing up the overall true cost of a mortgage is essential, as the right deal depends on how much someone is looking to borrow and for how long. If in doubt, borrowers would be wise to seek independent financial advice to navigate the mortgage maze.”

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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