Mortgage fees rise 20% in a year

Mortgage fees rise 20% in a year

Research from price comparison website, mform.co.uk, shows that the arrangement fees applied to the most competitive mortgages on the market have increased by an average of 20% during the past 12 months.

The average fee paid buy borrowers for a best-buy product has risen from £738.33 in August 2007 to £889.69.

For three-year fixed-rate deals the rise is even steeper, with the average fee now standing at £983, or 60% above last year’s level.

In the case of the two-year fixed-rate, charges have actually dropped 3%. However, borrowers opting for a market leader still face the highest arrangement fees in the market, at an average of £1,058.

Meanwhile, the average fee on a best-buy discount mortgage has risen by 11% to just over £950.

The credit crisis has left lenders struggling to maintain their profit margins while lending less and Francis Ghiloni, marketing and business development director at mform, is advising borrowers that its has never been more important to establish the true cost of a mortgage.

Headline interest rates form only part of the story and fees and charges need to be taken into account.

mform has recently launched a new system that allows consumers to compare their current loan with new offers from lenders, taking fees into account.

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