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Arrangement fees double on best fixed-rate loans

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by Gill Montia

Interest rates are not the only reason that mortgage costs in the UK are continuing to rise.

According to a report by online mortgage broker, Mform, the average fee charged for the most competitive three-year fixed-rate deal has risen 96% in year.

In March of last year borrowers could expect to pay a fee of around £578 for such a loan but the same mortgage today will be enhanced by an average fee of £1,132.

In the case of two-year fixes, charges have rise from £999 to £1,478.

The figures are based on the five best two-year and three-year fixed rate deals available at a 12 month interval.

Mform is warning borrowers that they should not be taken in by what appears to be an attractive fixed-rate, without calculating the fee into the overall cost of the loan.

For example HSBC recently made headline news by launching a “Rate Matcher” deal that allows homeowners whose current fixed-rate loans are about to expire to remortgage at the same rate, for two years.

However, the maximum fee for arranging the loan is £5,000.

Meanwhile, latest figures from the Department for Communities and Local Government show a 1.6% fall in house prices in February.

For flats the decline was greater than any other type of property, at 2.9%.

The average price of a house dropped by £3,541 to £217,737 during the month.

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News posted: April 16, 2008

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