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Mortgage fees reach highest level in five years

Paloma Kubiak
Written By:
Paloma Kubiak

Mortgage fees have increased by £15 since August to stand at £1,005, the highest average recorded in more than five years, according to research from Moneyfacts.

Although many lenders are reducing rates to appeal to remortgagors, this trend isn’t being seen for arrangement fees, the research site said.

Finance expert at Moneyfacts, Charlotte Nelson, said that despite the Bank of England increasing the base rate twice since November 2017 – from 0.25% to the current rate of 0.75% – mortgage rates are still far lower than providers’ costs.

She added: “For example, the average two-year fixed rate only stands 0.16% higher than it did in November 2017, increasing from 2.33% to 2.49%. By increasing fees, providers are making a small attempt to recoup some of this extra cost.

“As providers start to diversify into different sectors and types of products, the arrangement fee element of the deal allows them greater flexibility on not just the rates they offer, but the incentives they add as well.”