Mortgage fees reach record high

| September 6, 2012
Mortgage fees reach record high

Mortgage fees have soared by 70 per cent in the past four years to reach their highest ever level of £1,514, according to comparison site Moneyfacts.

In 2008 the average fee paid on a mortgage was just £899.

The figures have led to banks being accused of profiteering.

A study by Moneyfacts has shown that fees are even higher for popular two-year fixed-rate deals, with customers paying £1,565 on average to reserve a mortgage.

Some of the highest fees are on mortgages offering the most competitive rates, but shoppers may find similar mortgage rates with lower fees if they shop around, Moneyfacts says.

Sylvia Waycot of Moneyfacts.co.uk said: “There is no logical reason why fees should have increased so much.

“In the space of August and September alone they have increased by an average of £42.

“Mortgage administration costs can’t have jumped by 70pc.

“Credit searches are no more complex than in previous years, so why are fees so high?

“It could be that lenders are keen to push fees because they are an upfront cost, which means they get the money at the start regardless of fulfilling the full length of a fixed term.”

Although mortgage fees are soaring, mortgage payments for qualifying borrowers are at their most affordable level for 15 years, according to the Halifax.

Payments on home loans now account for a quarter of take-home pay, the lowest proportion of their disposable earnings since 1997.

When the UK property market peaked in 2007 mortgage payments accounted for 48 per cent of income.

The fall is attributed to the weak property market, with house prices floundering, and interest rates at the record low level of 0.5 per cent.

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