Big increase in mortgage arrangement fees

18 October 2004
A new report has found that homeowners are now paying far higher mortgage arrangement fees than in the past.

The fees are paid to the lender when a mortgage deal is struck, traditionally they have been set around £200-£400. However, the Observer newspaper reported yesterday that recently the lower-end fees have all but disappeared and very high fees are being seen more often.

"There is a definite move towards higher fees. Lenders are designing more of their mortgages to have very high upfront fees and low interest rates," said Rob Clifford, of independent mortgage adviser Mortgageforce.

"Our concern about this is that some consumers do not look all that closely at fees and penalties that have an impact on the overall cost of mortgages."

Mr Clifford also said that borrowers can be confused by offers to split bigger larger arrangement fees so customers pay little upfront, with the remainder added to their mortgage.

Mortgage brokers say rising fees result from lenders looking to recover the cost of bringing into force new mortgage regulations which come into effect at the end of this month.
© DeHavilland Information Services plc