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Fixed-rates hot – and they know it

09 February 2007
The application fees banks and building societies charge on fixed-rate mortgage products are on the up as lenders look to cash in on resurgent consumer demand, has claimed.

Since the August base rate rise, the average application fee has risen by 18.5 per cent while the number of products with an entry fee over £750 has risen from just 13 to 93.

Fees at the lower end of the spectrum – under £500 – have fallen by 28 per cent, with only 251 deals in this fee range still on the market.

"Homeowners are desperate to fix their mortgage rates to avoid incurring further costs caused by rising interest rates," commented MoneyExpert chief executive Sean Gardner.

And banks "aren't stupid" about the knock-on effect on the fees customers are prepared to pay, he added.

The rush towards fixed-rates in the aftermath of the surprise January rate hike announcement from the Bank of England may be calmed by news from the Monetary Policy Committee this week that rates will hold at 5.25 per cent for the time being.

But the rate freeze "could prove to be only a temporary reprieve", warned Howard Archer, financial analyst at Global Insight.

For more information on fixed rate mortgages, click here.

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