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Mortgage Set-up Fees Continue To Soar

While many people continue to scratch their heads about what can be done to stop the rot in the mortgage market, many lenders are taking advantage of the distressed situation to ramp up their mortgage set-up fees and request the money upfront. The number now charging in excess of £750 to set-up a mortgage has increase 14 fold over the last 18 months with nearly a third of all fixed rate mortgages now include a fee in excess of £750.

However, the study by MoneyExpert showed that the average fee has actually increased by 66% from £517 in 2006 to £860 today – a massive burden for home buyers before they even think about mortgage repayments. Alarmingly the trend for higher prices is not even confined to under £1,000 with the Halifax found to be charging a massive £3,999 on a three year fixed rate mortgage for existing customers not able to put down more that 25% as a deposit!

While the banks are complaining about the lack of activity in the mortgage sector, this massive increase in charges can only make the situation worse. There needs to be a balance between protecting the obvious extra risk of default from mortgage holders and the competitive position on the market. At the moment it seems to be very much against the consumer.

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