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Mortgage arrangement fees reach new high

The amount you pay to organise your mortgage has risen to a new high, despite the fact the Government has set up new schemes to make borrowing and getting on the property ladder easier.

The average fee for the arrangement of a mortgage has now reached £1,522, making it the highest this figure has peaked to for 25 years, according to Moneyfacts.

It is those looking to buy a home with the smallest deposits who have been hit the hardest. A borrower looking to take out a five year fixed-rate mortgage with a 10pc deposit now faces a fee of £1,433, an increase of £500 since January alone.

There has a also been a warning issued that mortgage lenders offering low interest rates make up for this by elevating the price of the fees they charge.
Sylvia Waycot, editor at Moneyfacts, said: “It’s easy to get caught up in the excitement of heavily marketed mortgages that shout about low interest rates, but beware that they will often be at the expense of high fees”

“The average fees have risen by almost 8pc since January, though it is hard to justify why setting up costs can possibly have risen this much”, she continued.

Mortgage rates have been falling since the Government launched it’s funding for Lending scheme last year, which allows lenders access to cheap finance which can then be passed on to the consumer. This has meant more people have been able to afford to borrow in order to get a mortgage, but the fact fees are rising will again limit people options.

Ms Waycot added on the subject: “If the Government is serious about rekindling the mortgage market with it’s Funding for Lending scheme, it should ensure all it’s subscribed members offer mortgages that exclude hiked up charges that are hidden behind low rates”.

If you have any questions related to your mortgage, or any other financial issue, please contact one of our advisors who will be happy to help.

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