Mortgage advisers Charcol have revealed that the fees mortgage lenders are charging borrowers have risen by 42 per cent in the last six months.
The average mortgage arrangement fee, Charcol claims, has increased from £339 in July 2004 to £480 at the start of 2005. Exit fees have also increased.
Charcol asserts that the increase is down to a highly competitive UK mortgage market, with more than 100 companies vying for business, and increasingly financially-savvy borrowers who shop around for the best deal.
"This [market] competition has been hugely beneficial to the consumer, who has a huge choice of mortgage deals with a combination of different interest rates, fees and features," comments Ray Boulger, senior technical manager at Charcol.
"With this consumer success comes the need for the lenders to make their profit from somewhere. The increase in both arrangement fees and exit fees has helped them to achieve this."
The effect of the increased fee is not entirely negative for the borrower however, Mr Boulger asserts.
"There is a trade off between fees, interest rates and features," he states.
"As a rule of thumb a mortgage with a higher fee but a lower interest rate will be better value for larger mortgages and vice versa."
Consumers are advised to continue their discerning approach to mortgage-borrowing, making sure they are getting the best deal for their needs.To find out more about mortgages, click here.
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