Mortgage arrangement fees have fallen by around 25 per cent across the fixed and tracker mortgage markets in the last year, analysis from moneysupermarket.com has found.
Following the news that First Direct has cut the cost of its mortgage fees, moneysupermarket.com decided to investigate how mortgage fees might be changing at other lenders and found a similar story across the board.
The average two year fixed rate mortgage now comes with a fee of £957, a 30 per cent decline on last year's average fee of £1,243; a three year fixed rate mortgage now has an average fee of £808, a 26 per cent fall on last year when it was £1,018; the fee for an average two year tracker mortgage will now cost £1,272 – 24 per cent less than the £1,581 it would have cost 12 months ago.
Commenting on the fall in the cost of mortgage fees over the last year, Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com said: "This is a welcome move by First Direct, which brings its arrangement fee down to a more palatable level."
But, Ms Skenfield warned buyers not to be blinded by cheaper mortgage fees to the detriment of thoroughly checking the overall cost of the mortgage, as the "devil is in the detail," with low fees often going hand-in-hand with higher interest rates, and vice-versa.
"We have seen a significant drop in the average fees on mortgages over the last year but this has been driven by lenders not passing on the benefit of the significant drop in the cost of funds by charging higher interest rates," she explained.
"Borrowers need to shop around to make sure they are getting the best deals on both rate and fees."
© Fair Investment Company Ltd