Mortgage fees and rates rise
Average mortgage fees and rates have gone up, coinciding with a rise in product choice, data from Moneyfacts has shown.
The average fee for a fixed rate mortgage is now £1,075, an increase of £57 year-on-year.
Meanwhile rates for fee paying mortgages have risen by 0.65 per cent to 3.08 per cent annually, and fee-free options have seen a 0.55 per cent increase to an average rate of 2.87 per cent.
Interest rates have also risen more recently, with fee paying products reporting a 0.16 per cent uptick and fee-free mortgages increasing by 0.08 per cent since April.
There are also fewer deals with a fee-free incentive. The data showed the proportion of fee-free products had declined from 40 per cent in June last year to 35 per cent at the start of this month.
This represented 1,299 products with no fee.
The proportion of products with free or refunded legals also dropped slightly, accounting for 49 per cent of options down from half of all deals last year.
The position on valuations
It was the same for mortgages with free or refunded valuations. These accounted for 73 per cent of mortgages in June, compared to 78 per cent last year.
However, as there were fewer mortgages on the market overall following the closure of the property sector, there is actually more choice for borrowers.
The 78 per cent of products with a free or refunded valuation made up 1,863 mortgages last year, significantly lower than the 2,695 products which make up 73 per cent of the market today.
It is also an improvement on last month where mortgages with free or refunded valuations made up 72 per cent of options or 2,403 deals.
The proportion of mortgages offering cashback represented 30 per cent of all deals this month, down from 33 per cent last year.
Again, there is greater provision generally as the differences in product numbers amounted to 1,108 this June, up from 781 last year.
Eleanor Williams, spokesperson at Moneyfacts.co.uk, said: “Cash-strapped prospective borrowers may have limited funds available to meet the costs associated with taking on a mortgage, so comparing upfront costs is vital.
“Lenders may be raising fees to gain margins in the aftermath of a fixed rate war, and this may also potentially be linked to the resurgence of sub-one per cent mortgages as, whilst eye-catchingly low, these initial rates can also carry the highest fees. Borrowers may then need to search a little harder if they are looking to keep mortgage costs to a minimum or secure a fixed rate mortgage without a fee.”
She added: “Borrowers may be disappointed to see that average fixed rates have continued to rise of late, but overall, this may be attributable to the return of traditionally higher rated, higher loan to value (LTV) products.
“It is a pleasant surprise to see stability over the past two years in the proportion of fixed deals that offer incentives, which may suggest lenders are still working hard to offer an array of products to entice customers. Therefore, despite increases to rates and fees alike, there are clearly still great deals out there for borrowers to consider.”