The numbers are falling for some products…
Compared with last year, lenders are now offering more fixed deals without a fee and are charging less on deals that carry a product fee, the latest analysis by financial data provider Moneyfacts.co.uk has shown.
At £1,057, the average fee currently charged on a fixed rate mortgage deal (not including no-fee products) has fallen by £18 year-on-year.
Over the past 12 months, the highest average fee recorded was in September 2021 (£1,090), around the time there were several lenders offering sub-1% fixed mortgages. The highest ever recorded average mortgage fee on Moneyfacts records was in August 2012 (£1,106).
The proportion of the market offering fixed rate mortgage deals that do not charge a fee rose from 35% in June 2021 to 40% at the start of this month.
The data analysis also revealed that the rate gap between fixed deals that carry a product fee and those that do not has narrowed, and that there are more deals offering cashback than a year ago.
“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,” Rachel Springall, finance expert at Moneyfacts.co.uk, said.
“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.”
Springall added that 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. Seeking independent advice to assess the overall deal is wise,” she pointed out.
“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.”
