Mortgage rates and fees both rising
The average fee has increased by £48 in just two months, Moneyfacts found.
At the same time, typical rates have increased on deals with and without a fee by 0.25% and 0.33% respectively since July.
The amount of deals that offer a cashback incentive has also dropped by 5% to 27% of the market over the past month.
As product availability continues to be an issue for the market, now could be a good time for borrowers to lock into deals, according to Moneyfacts.
Eleanor Williams, spokesperson for Moneyfacts, said: “With the UK having entered a recession, and concerns around employment and income growing, locking into a fixed rate mortgage deal could provide a household with security from potential interest rate increases, and stability with the ability to budget to a predictable monthly payment during a time of economic uncertainty.
“While fixed rates remain lower than pre-pandemic levels, there may be mortgage borrowers who want to take advantage and secure a new deal but are hesitating due to concerns around needing to cover additional expenses, such as paying a product fee or having to meet other set-up costs like conveyancing fees or valuation expenses.
“The average rate charged on fixed rate deals that carry a fee is only 0.07% lower than the average rate on fixed rate products that do not charge a fee, and the proportion of the fixed rate market where no fee is payable remains stable at around 40%.
“Therefore, despite the significant contraction in product availability overall in the mortgage sector, lenders are still providing fee-free deals. Even with a slightly higher average fixed rate, no-fee deals could work out more cost-effective in the long-term.”