Fixed rate mortgage fees hit two-year high

Despite the long-running price war, mortgage fees are now on the rise, with fixed rates at a two-year high, according to Moneyfacts data.

Related topics:  Mortgages
Rozi Jones
9th May 2016
pound money house mortgage growth

The last six months have seen a particularly sharp rise in the average mortgage fee, up from £927 to £967, and sits just below the average of two years ago.

Meanwhile, the average fixed mortgage fee has also seen a rise over the last six months to stand at a two-year high of £975.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Average mortgage fees are on the rise and this is likely to be due to the appearance of a flux of low rate deals that are accompanied by larger upfront costs. For instance, the six lowest two-year fixed rate mortgages have an average fee of £1,483, which sits some way above the average two-year fixed fee overall of £1,062. Taking out one of these low-rate deals may therefore not be as cost-effective as it would first appear, particularly if the borrower is not looking to secure a very large mortgage amount.

“A borrower with a 25% deposit who wants a £250,000 mortgage could save £3,275.08 over the lifetime of the mortgage by taking out the lowest two-year fixed mortgage with no fees compared to the lowest two-year fixed rate overall, which has a £1,675 fee. This is because the borrower would make an initial saving in upfront costs and could then capitalise on the lower standard variable rate of the former deal after the two-year fixed term comes to an end."

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