Mortgage fees have rocketed in two years
December 26, 2007
According to a recent report the upfront fees that are charged by mortgage lenders have rocketed over the past two years, with many fees actually doubling over the two year period.
The data comes from a report from Moneyfacts, and suggests that mortgage fees have close to doubles in just two years. This puts additional pressure on already struggling potential home buyers, who have seen property prices shoot up, interest rates rocket, and now mortgages fees go through the roof.
The report states that in November 2005 the average mortgage arrangement fee was around £441, and that this fee now comes in at an average of £827. It is thought that many mortgage companies have hiked up the upfront arrangement fee to compensate for having to scrap exit fees on mortgages, a rule that came into force earlier this year. Northern Rock currently charges the highest arrangement fee, which comes in at 3.5%.
An official from Moneyfacts stated: “The increase in fees may not automatically mean that the cost of the deals has increased. What it does mean is the maze which borrowers need to navigate to get the best deal has become more complicated. 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”
Some lenders have been accused of misleading customers by offering low interest rates on mortgages but charging extortionate arrangement fees. The Halifax came under fire for this earlier this year and faced accusations from two Liberal Democrat MPs. Customers are being urged to shop around in order to avoid these fees, as Moneyfacts officials point out that nearly a quarter of the 6000 mortgages on the market come with no arrangement fee at all.
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