Mortgage application fees up by 20pc

The aggregation site said that mortgages customers should look beyond headline rates to find the best priced deal as lower rates did not always mean the best deals.

As an example MoneySupermarket looked at HSBC’s lowest 2-year fixed rate mortgage at 2.64%.

Adding the combined booking and arrangement fee of £1,999 meant the total amount paid back over the two years for someone borrowing £150,000 was £18,404.20.

The same amount borrowed over two years with Bank of Ireland at a higher rate of 2.78% and a fee of only £799 would cost £17,461.41, a saving of £942.72 over the two year period despite the interest rate being 0.14% higher.

Clare Francis, mortgage expert at MoneySupermarket, said: “It’s very easy for borrowers looking for a new mortgage to be attracted by low headline rates; however it is vital to consider the account arrangement and booking fees as part of the overall cost.

“Fee costs can vary greatly between providers so taking the time to work out the total amount you have to repay over the term of the offer is essential.

“That said, for some people it may be worth paying a high fee in order to benefit from the lowest interest rate. It will all depend on the amount you are looking to borrow – on large mortgages a high fee can be worth paying in order to secure a low rate.

“However with smaller mortgages, where a high fee will form a larger proportion of the overall loan size, it may work out cheaper to keep the set up costs low even if it means paying a slightly higher monthly payment.

“When comparing mortgages you should always look at the total amount you would repay, including fees, over the term of the deal.”