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Mortgage fees and incentives volatile on fixed deals

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
04/03/2024

Mortgage fees and incentives volatile on fixed deals

Fixed mortgage rates remain volatile, and now the average fee charged on fixed deals has risen. Analysis by Moneyfactscompare.co.uk reveals the changing landscape of costs and incentives across the fixed mortgage market.

Mortgage fees and incentives volatile on fixed deals

Fixed mortgage rates remain volatile, and now the average fee charged on fixed deals has risen. Analysis by Moneyfactscompare.co.uk reveals the changing landscape of costs and incentives across the fixed mortgage market.

  • 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 risen 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 proportion 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.
  • The proportion of the market offering cashback has dropped by 9% since March 2023.
  • 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 risen 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 proportion 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.
  • 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

 

 

 

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 Expert 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. It would also be more cost-effective to move off a standard variable rate and onto a fixed deal, based on average rates. 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.”

 

Rachel Springall, Finance Expert 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. It would also be more cost-effective to move off a standard variable rate and onto a fixed deal, based on average rates. 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.”

 

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfactscompare.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 35 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfactscompare.co.uk is the financial product price comparison site, launched as Moneyfacts.co.uk in 2000 and rebranded to Moneyfactscompare.co.uk in 2023, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfactscompare.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfactscompare.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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James Hyde Press & PR Manager
Rachel Springall Press Officer / Finance Expert
Caitlyn Eastell Apprentice Press & PR Assistant