Application fees on a range of two and three-year fixed rate mortgages have almost doubled in the last 12 months, research suggests.
A study by mform.co.uk says fees on five of the most competitive three-year fixed rate deals have jumped from an average of £578 to £1,132 and from £999 to £1,478 for two-year deals.
The price comparison website is urging borrowers on the look-out for a new deal to focus on the true cost of their loan, taking into account fees as well as the initial monthly payment.
It says higher fees are the latest setback for borrowers, as most can expect to see no savings on their initial monthly payments on their new fixed rate mortgages, despite last week’s Bank of England rate cut.
Last October, when the base rate was 5.75%, the average interest rate of the top five two-year fixed rate mortgages was 5.67%, but now it is just 5.59%.
mform.co.uk marketing and business development director Francis Ghiloni says: “After all the panic of recent weeks in the mortgage market people may be tempted to grab the best deal they can and may focus on rates to exclusion of everything else.
“They could be in for a nasty shock when it comes to the fee which is charged as they have rocketed in the past year. They should be focusing on the true cost of their loan taking into account fees as well.”
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