More lenders are currently offering more fixed deals without a fee than a year ago and are charging less on deals that carry a product fee, the latest analysis by Moneyfacts.co.uk shows.

The study also reveals that the rate gap between fixed deals that carry a product fee and those that do not has narrowed, and that there are more deals offering cashback than a year ago.

Mortgage product fees have fallen on average. At £1,057, the average fee currently charged on a fixed rate mortgage deal (not including no-fee products) has dropped by £18 year-on-year.

Over the past 12 months, the highest average fee recorded was £1,090, recorded in September 2021, around the time there were several lenders offering sub-1% fixed mortgages.

The highest ever recorded average mortgage fee on Moneyfacts records was £1,106 in August 2012.

The proportion of the market offering fixed rate mortgage deals that do not charge a fee has risen from 35% in June 2021 to 40% at the start of this month.

The rate gap between average fixed rates with and without a product fee has narrowed, currently at 0.03% compared to 0.21% a year ago.

Rachel Springall, finance expert at Moneyfacts.co.uk, commented: “Mortgage rates may be on the rise but it’s not all bad news for borrowers as they can still find an abundance of options to help them save on the upfront cost of their deal. Mortgage fees have fallen on average on fixed deals, and there are now more fee-free offers available. Weighing up a deal on its true cost is vital, particularly as the rate gap between average fixed rates with a product fee and those without has reduced.

“Due to the changes in the mortgage landscape borrowers may find themselves better off by looking beyond headline-grabbing fixed initial rates, especially as interest rates continue to rise. Indeed, back in September 2021, there were various lenders offering sub-1% mortgage deals, but that same month the average mortgage fee was just £16 shy of the record high recorded in 2012. Low-rate fixed mortgages can carry some of the highest fees, so they may not be the best choice for every borrower, so seeking independent advice to assess the overall deal is wise.

“Remortgage customers could stand to make substantial savings by switching their mortgage, and those who may be cash-strapped can find fee-free offers as well as deals that cover their legal fees, valuation or even pay cashback to help with upfront costs. First-time buyers can also stand to benefit from these incentives if they have exhausted their savings.

“In the months ahead, it will be interesting to see how mortgage lenders will adapt their ranges to appeal to both new borrowers and their existing customers during the cost-of-living crisis.”