Average two-year fixed rate deals hit record low

According to the analysis by MoneySupermarket average mortgage fees for fixed rate mortgage products have risen by 6.4% since June as rates have come down.

Anyone looking at low rate deals therefore need to look beyond the headline rate and take into account all fees and charges before deciding on a loan, or they could end up paying more for their borrowing than necessary.

Once fees are factored in, a product with a slightly higher rate but lower set-up costs may actually prove cheaper for some borrowers.

For example, the Leeds Building Society two-year fixed rate deal at 1.99% includes a combined booking and arrangement fee of £1,999. The high product fee means that this deal is only a best buy for those customers looking to borrow more than £164,350 according to MoneySupermarket .

It says that for smaller mortgages, Yorkshire Building Society's two-year fixed rate deal at 2.49% works out cheaper, due to a lower £995 fee. Borrowing £150,000 on the Leeds BS mortgage would cost £17,347 over the two year term, while Yorkshire Building Society's would cost £17,259 - a saving of £88.

Clare Francis, mortgage spokesperson at MoneySupermarket said: "Most people are blinded by rate when it comes to mortgages… When looking for a mortgage it is vital to work out the total amount you’d repay over the term of the offer."