Britons are being urged against “rushing” into choosing a deal when buying property as mortgage fees exceed £1,100 amid “volatile” interest rates.
Research carried out by Moneyfactscompare found that the average product fee charged on a fixed-rate mortgage has risen by £46 since March 2023.
As such, the average homebuyer faces forking out more than £1,141 to secure the purchase of their desired property.
The money comparison website is warning that there are fewer deals offering perks, such as free legal fees or cashback, at the same time as mortgage fees increasing.
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Mortgage fees are rising in a blow to homebuyers
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This comes as homeowners and prospective homebuyers are still reeling from the Bank of England’s decision to hike the base rate to 5.25 per cent in its fight against inflation.
The increase to interest rates has been passed on from lenders to customers, who have been saddled with skyrocketing mortgage repayments.
Based on Moneyfacts’ analysis, the proportion of fixed-rate deals providing a free or refunded valuation has dropped to 73 per cent from 75 per cent at the beginning of March 2023.
Furthermore, the percentage of fixed-rate mortgage deals with free or refunded legal fees has dropped from 45 per cent to 44 per cent over the same period.
Only a quarter of the same deals come with cashback which is down from just over a third last year, Moneyfacts found.
According to the research, just over a third of fixed-rate deals do not charge a product fee which is down from 43 per cent.
Rachel Springall, a finance expert at Moneyfactscompare, reminded those looking to buy “not to rush” when picking the right deal for them in light of rising mortgage costs.
She said: “There is an abundance of deals to suit different needs, some may be headline-grabbing rates, but these can also charge a high up-front fee.
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The Bank of England base rate is at a 15-year high of 5.25 per cent GB NEWS“Those borrowers looking to remortgage right now will find some of the lowest rates will cost them more than £1,000 in a product fee, but a mortgage with a slightly higher initial fixed rate and lower product fee could be a better package, based on true cost.
“Mortgage interest rates remain volatile, and this may well be the case for the next few weeks. However, even if borrowers lock into a rate that’s slightly higher than what may have been available a few weeks ago, borrowers could still get an attractive package by finding a deal that has some cost-saving incentives, a reasonable product fee, or no fee, and maybe even cashback.”
According to the expert, first-time buyers are more likely to need to save more on the upfront cost of their mortgage or rely on incentives when picking a deal.
Ms Springall added: “These packages may be more suitable if new buyers have exhausted all their savings on a deposit, removal and furnishing costs.”
