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, according to the latest data from Moneyfacts.
Analysis shows that the average mortgage product fee currently charged on a fixed rate mortgage deal (not including no-fee products) has fallen by £18 year-on-year to £1,057.
Over the past 12 months, the highest average fee recorded was in September 2021 at £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 when it stood at £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.
Meanwhile, 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.
Moneyfacts finance expert Rachel Springall says: “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.”
“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,” Springall explains.