Mortgage fees jump 70 per cent in four years

Mortgage fees have reached new highs rising by 70 per cent in the last four years, according to Moneyfacts.

A year before Bank of England base rate fell to 0.5 per cent the average fee was £889. Four years later, the average fee has risen by 70 per cent to its current level of £1,514.

Today, most people are interested in fixing their mortgage payments. The average two-year fixed fee is £1,565 and a 75 per cent loan-to-value (LTV) offers an average rate of 4.31 per cent while the five-year fix is slightly less at £1,014 and the average 75 per cent LTV will cost 4.19 per cent.

The highest fee that Moneyfacts has found is through Legal & General Mortgage Club. The mortgage is provided by Accord, which is the intermediary lender of Yorkshire Building Society,  and the fee is £3,990 on a 75 per cent LTV fixed for five years at 3.79 per cent - so in this case the higher fee earns you a lower overall rate. But this doesn’t follow across the board. The Post Office offers a two-year fixed 75 per cent LTV at 3.65 per cent with no fee.

Sylvia Waycot, finance expert at Moneyfacts, said: “There is no logical reason why fees should have increased so much. In the space of just August and September alone, they have increased by an average of £42. Mortgage administration costs can’t have jumped 70 per cent. Credit searches are no more complex than in previous years, so why are fees so high?

“It could be that lenders are keen to push fees because they are an upfront cost, which means they get the money at the start regardless of fulfilling the full length of a fixed term. And should you not fulfil the full length of the fixed term, well that can open the door to a whole host of other upfront charges.