The average mortgage arrangement fee has almost doubled in just two years, research shows.
Analysis by eMoneyfacts.co.uk reveal an average flat arrangement fee in November 2005 stood at £441, but has now climbed to £827.
The firm adds another telling statistic is the fact that a “massive” 9% of prime deals now charge a percentage fee.
David Knight, mortgage analyst from eMoneyfacts.co.uk, says: “Thousands of borrowers coming off a two year fixed rate will be bracing themselves for higher interest charges, with the best deals over 1% higher than in 2005
“But they will also need to prepare themselves to pay much higher fees, with the average fee rising 100%.
“The use of percentage fees has become more common with 9% of all prime mortgage deals charging a percentage fee ranging between 0.2% and 3.5%.
“The highest fee from Northern Rock at 3.5% would add a massive £4,550 to an average loan of £130K.”
Knight says the increase in fees may not automatically mean the cost of the deals has increased, but that the “maze” which borrowers need to navigate to get the best deal has become more complicated.
“Unfortunately too many borrowers still focus their initial attention on getting the best rate, without taking full consideration of the true cost of the deal,” he says.
“Providers to some degree exploit this by offering a wide range of low rate, high fee deals.
“With around 24% of all mortgages not charging a fee, the market certainly offers choice, no matter what type of deal you are after.
“No fee, low fee, high fee and even percentage fees can offer a good deal for the right borrower. The trick is to successfully navigate the 6,000 plus deals to find the best one for you.
“This maze of thousands of mortgages, with differing rate and fee combinations means it is more important than ever that prospective borrowers need to do their homework before committing to their new mortgage deal.”
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