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Mortgage fees fall on average and fee-free options rise

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
06/06/2022

Mortgage fees fall on average and fee-free options rise

Lenders are now 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 also shows 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 fees fall on average and fee-free options rise

Lenders are now 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 also shows 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 fallen by £18 year-on-year. Over the past 12 months, the highest average fee recorded was in September 2021 (£1,090), around the time there were several lenders offering sub-1% fixed mortgages. The highest ever recorded average mortgage fee on Moneyfacts records was in August 2012 (£1,106).
  • 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.
  • 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 fallen by £18 year-on-year. Over the past 12 months, the highest average fee recorded was in September 2021 (£1,090), around the time there were several lenders offering sub-1% fixed mortgages. The highest ever recorded average mortgage fee on Moneyfacts records was in August 2012 (£1,106).
  • 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.

Fixed mortgage market analysis

 

Jun-20

Jun-21

May-22

Jun-22

Average product fee (excluding deals with no fee)

£1,018

£1,075

£1,074

£1,057

Deals with no product fee

959 (40%)

1299 (35%)

1632 (37%)

1735 (40%)

Deals with free/refunded legal fees

1,252 (52%)

1816 (49%)

2203 (49%)

2203 (51%)

Deals with a free/refunded valuation

1,863 (78%)

2695 (73%)

3166 (71%)

3105 (72%)

Deals with cashback

781 (33%)

1108 (30%)

1276 (29%)

1350 (31%)

Average rate (deals with fee)

2.43%

3.08%

3.50%

3.68%

Average rate (deals with no fee)

2.32%

2.87%

3.29%

3.71%

The % shown is the proportion of deals out of the fixed mortgage market. Source: Moneyfacts.co.uk. Data shown is as at the first available day of the month, unless stated otherwise.

Fixed mortgage market analysis

 

Jun-20

Jun-21

May-22

Jun-22

Average product fee (excluding deals with no fee)

£1,018

£1,075

£1,074

£1,057

Deals with no product fee

959 (40%)

1299 (35%)

1632 (37%)

1735 (40%)

Deals with free/refunded legal fees

1,252 (52%)

1816 (49%)

2203 (49%)

2203 (51%)

Deals with a free/refunded valuation

1,863 (78%)

2695 (73%)

3166 (71%)

3105 (72%)

Deals with cashback

781 (33%)

1108 (30%)

1276 (29%)

1350 (31%)

Average rate (deals with fee)

2.43%

3.08%

3.50%

3.68%

Average rate (deals with no fee)

2.32%

2.87%

3.29%

3.71%

The % shown is the proportion of deals out of the fixed mortgage market. Source: Moneyfacts.co.uk. Data shown is as at the first available day of the month, unless stated otherwise.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“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.”

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“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.”

Notes to editors

Pioneering financial comparison technology for over 30 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.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.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 Moneyfacts.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 30 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.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.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 Moneyfacts.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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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert