The latest findings from Moneyfacts have shown the creeping costs associated with securing a mortgage. As of the end of February 2024, homeowners and potential buyers are facing an uphill battle with not only higher mortgage rates but also an increase in product fees. This financial double whammy comes at a time when many are looking to either step onto the property ladder or secure a more favorable mortgage deal.

Fees Climbing Up

A shift has been observed in the average fee on fixed mortgage deals, which has seen an increase of £46, climbing from £1,095 in March 2023 to £1,141 just one year later. This upward trend in product fees represents an additional hurdle for borrowers who are already dealing with a challenging economic environment.

Compounding the issue, the availability of fee-free mortgage deals has significantly diminished, moving from 43% to 35% in the same period. This reduction means that prospective borrowers have fewer options to avoid these extra charges, making it more important than ever to carefully assess the full cost of any mortgage deal.

The Ripple Effect

Rachel Springall, a Finance Expert at Moneyfactscompare.co.uk, emphasises the importance of thorough comparison for those concerned about rising rates. “Borrowers concerned about rising fixed mortgage rates would be wise not to rush when comparing deals and ensure they consider the overall true cost package, as the average mortgage fee has crept up. 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.”