Fixed mortgage rates remain volatile, and now the average fee charged on fixed deals has risen, new Analysis by Moneyfactscompare.co.uk shows.
The study found that mortgage product fees have risen on average. At £1,141, the average fee currently charged on a fixed rate mortgage deal (not including no-fee products) has increased by £46 since March 2023.
The proportion of the market offering fixed rate mortgage deals that offer a free or refunded valuation incentive has fallen to 73%, from 75% at the start of March 2023.
The study also reveal that share of the market offering fixed rate mortgage deals that offer a free or refunded legal fees incentive has fallen to 44%, from 45% at the start of March 2023.
Meanwhile, the proportion of the market offering cashback has dropped by 9% since March 2023.
| Fixed mortgage market analysis | ||||
| Mar-22 | Mar-23 | Feb-24 | 29-Feb-24 | |
| Average product fee £ (excluding deals with no fee) | £1,073 | £1,095 | £1,118 | £1,141 |
| Deals with no £ product fee | 1,547 (37%) | 1,551 (43%) | 1,763 (35%) | 1,845 (35%) |
| Deals with free/refunded legal fees | 2,045 (49%) | 1,646 (45%) | 2,186 (44%) | 2,294 (44%) |
| Deals with a free/refunded valuation | 3,020 (72%) | 2,748 (75%) | 3,714 (74%) | 3,857 (73%) |
| Deals with £ cashback | 1,220 (29%) | 1,235 (34%) | 1,368 (27%) | 1,320 (25%) |
| Average rate (deals with £ fee) | 3.20% | 5.48% | 5.81% | 5.94% |
| Average rate (deals with no £ fee) | 2.93% | 5.59% | 5.69% | 5.77% |
| The % shown is the proportion of deals out of the fixed mortgage market, which include adverse credit deals, but exclude % product fee deals. Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | ||||
Rachel Springall, finance commentator at Moneyfactscompare.co.uk, said: “Borrowers concerned about rising fixed mortgage rates would be wise not to rush when comparing deals and ensure they consider the overall true cost package, as the average mortgage fee has crept up. There is an abundance of deals to suit different needs, some may be headline-grabbing rates, but these can also charge a high upfront fee.
“The best mortgage will come down to how much someone needs to borrow and for how long, so seeking independent advice to crunch the numbers is wise. Those borrowers looking to remortgage right now will find some of the lowest rates will cost them more than £1,000 in a product fee, but a mortgage with a slightly higher initial fixed rate and lower product fee could be a better package based on true cost.
“Mortgage interest rates remain volatile, and this may well be the case for the next few weeks. However, even if borrowers lock into a rate that’s slightly higher than what may have been available a few weeks ago, borrowers could still get an attractive package by finding a deal that has some cost-saving incentives, a reasonable product fee, or no fee, and maybe even cashback.”
Springall believes that it would be more cost-effective to move off a standard variable rate and onto a fixed deal, based on average rates.
She added: “First-time buyers might need to save on the upfront cost of their deal or opt for a mortgage that comes with a bundle of incentives, such as cashback. These packages may be more suitable if new buyers have exhausted all their savings on a deposit, removal and furnishing costs.
“The majority of the fixed mortgages on the market will offer borrowers a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees. Just over a third of fixed mortgages on the market do not charge a product fee, and on those deals that do charge a fee, some lenders can allow borrowers to add it to the mortgage advance. These options can save borrowers on the upfront cost of their deal, but it’s vital to be conscious of the true cost of any mortgage before they apply.”
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