Average fixed-rate mortgage fee up by £46 to £1,141 as fewer deals offer perks

04 March 2024 , 15:38

1096     0

The average fee for a fixed-rate mortgage has been rising, according to new research (Image: PA Archive/PA Images)

Fixed mortgage fees have risen over the past year, according to a report by financial information website Moneyfactcompare.co.uk.

The average fee for a fixed-rate mortgage has gone up by £46 since March 2023, now standing at £1,141. The site also found that fewer fixed-rate deals are offering perks like free legal fees or cashback.

Only a third (35%) of these deals don't charge a product fee, down from 43% in March last year. Free or refunded valuations are offered by 73% of deals, down from 75%.

Deals with free or refunded legal fees have slightly decreased to 44%, and only a quarter (25%) offer cashback, down from 34% in March 2023. Despite this, the overall number of fixed-rate mortgages has increased, meaning more deals are offering perks.

For instance, while the percentage of fixed-rate mortgages on the market with no product fee has decreased, the number of mortgages with no product fee has increased, from 1,551 at the start of March 2023 (representing 43% of the fixed-rate market at that time), to 1,845 (representing 35% of the current market).

8 money changes coming in February including Universal Credit and passport fees

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: "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."

"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. 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."

Ms Springall added: "First-time buyers might need to save on the upfront cost of their deal or opt for a mortgage that comes with a bundle of incentives, such as cashback. These packages may be more suitable if new buyers have exhausted all their savings on a deposit, removal and furnishing costs."

Lawrence Matheson