Analysis by MoneySupermarket found the average application fee on fixed rate products increased by 17% and tracker products by 9% since June 2012, meaning in some cases the lowest rate does not necessarily equate to the best value mortgage.

The research found the application fees on two-year fixed rate mortgages have increased by 30%, to an average of £1,033, while five-year fees have increased by 22% to an average of £883.

Homebuyers need to make sure they do not overlook the impact of the fee and work out the total cost of borrowing, rather than focusing on the headline rate alone.

For example, the lowest two-year fixed rate mortgage is from Chelsea Building Society offering 1.89%, however adding the combined booking and arrangement fee of £1,695 means the total amount to be paid back over the two years for someone borrowing £150,000 is £16,761.72.

The same amount borrowed over two years with Norwich & Peterborough at a higher rate of 1.99%, and a fee of only £995, would cost £16,236.20 – a saving of £525.52 over the two year period, despite the interest rate being 0.1 percentage points higher.

Clare Francis, mortgage expert at MoneySupermarket.com said: “It’s very easy to be attracted by low headline rates when looking at mortgages, but you must also factor in the fees you’ll be charged to take the mortgage out. Set-up 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.

“When comparing mortgages you should always look at the total amount you would repay, including fees, over the term of the deal. This is the only way to identify which product will be the best value to you.

“Think about whether you want a fixed or variable rate deal, and if you do opt for a variable rate mortgage you need to ensure that you will be able to afford your monthly repayments if and when interest rates do rise as they won’t stay at this level forever.”