Mortgage fees rise 40% in six months
Uk lenders have hiked mortgage arrangement fees by more than 40 per cent over the past six months, in an effort to claw back profits lost from offering ever lower interest rates, according to Charcol, the broker.
The average arrangement fee is now £480, compared with £339 last summer, a rise of 42 per cent.
Average fees hit a low of less than £300 in the summer of 2003 when the property market was at its height. However, a slowdown in the property market over the past year has seen lenders write much less business.
With mortgage rates still very low, in comparison with the base rate, many are struggling to generate big profits.
Ray Boulger, the senior technical manager for Charcol, said: "The UK mortgage market is arguably the most competitive in the world, with over 100 lenders vying for business. This 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. 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."
Mr Boulger added that since the start of 2004, fees have risen by some 53 per cent, with fewer and fewer lenders now offering to waive the arrangement fee.
"What is clear is that in a hugely competitive market lenders will continue to try to conjure up new ways of generating extra income," he said. "It is very easy for borrowers to succumb to lenders' advertising and take a loan that is inappropriate for them. Choosing the wrong deal can prove costly in both the short and long run, and so getting it right first time is a must."
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