Mortgage Arrangement Fees Double Since 2005, Say Moneyfacts

by Stewart Douglas

Story link: Mortgage Arrangement Fees Double Since 2005, Say Moneyfacts

The cost of arranging the average mortgage in the UK has skyrocketed by almost 100% over just 24 months, according to shocking findings published today by research house Moneyfacts, which examined a range of mortgage lenders and brokers across the UK and the products they sell.

The average cost of arranging a mortgage in the UK in terms of upfront fees today is £827, up from £441 since November 2005 - over the course of just two years, reflecting a growing trend amongst lenders to levy more upfront in order to provide cheaper bottom line rates.

Troubled lender Northern Rock tops the table as the most expensive mortgage arranger, charging a staggering 3.5% of mortgage value in arrangement fees alone - £3,500 on a £100,000 mortgage, despite otherwise attractive rates of interest repayments, which the report today has highlighted as having potential to convince customers they’re in line for a better deal.

It is thought that a further driving force behind the rise in fees has come from the forced withdrawal of exit fees, which had been deemed to be too excessive and unfair to be levied on consumer borrowers.

Moneyfacts, in their report released today, said that consumers should be more active in searching for the right mortgage, taking into account all the fees levied in order to calculate the best deal for them, rather than relying on the often artificially attractive rates of interest.

Whilst upfront fees have undoubtedly increased, Moneyfacts were today quick to point out that the overall value of mortgages has not necessarily likewise increased, with banks rearranging the total pricing across the duration of the mortgage.

“Unfortunately too many borrowers still focus their initial attention on getting the best rate, without taking full consideration of the true cost of the deal,”said David Knight today from Moneyfacts.