Average mortgage product fees rise to £1,141

Meanwhile, the proportion of deals offering cashback and other incentives drops.

The average product fee on fixed mortgage deals has increased by £46 since March 2023, according to Moneyfacts analysis.

While fixed rate mortgages (not including no-fee products) charged an average fee of £1,095 one year ago, this has now risen to £1,141.

Furthermore, the proportion of fee-free mortgage deals fell from 43% in March 2023 to 35% at the end of February 2024.

This latest analysis is yet another blow for borrowers who are also having to contend with higher average mortgage rates than one year ago.

“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,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“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,” she continued.

Extra incentives

Aside from product fees, the proportion of mortgage deals offering certain incentives to borrowers has also dropped over the past year.

Most notably, only 25% of deals offer some form of cashback, compared to 34% in March 2023.

While the majority of deals still offer a free or refunded valuation, the proportion of deals with this incentive fell from 75% in March 2023 to 73% at the end of February 2024.

Elsewhere, the proportion offering free or refunded legal fees dropped slightly from 45% to 44%.

These cost-saving incentives can be useful perks for borrowers, such as cash-strapped first-time buyers who are trying to minimise their upfront costs.

However, it’s important to choose a mortgage deal based on its overall cost and suitability for your situation, not just on the extra incentives it may offer.

Choosing a deal

With so many elements to think about when choosing a mortgage, including the rate, product fees and incentives, it’s important to compare deals and weigh up the total cost of each.

“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,” Springall explained.

On deals that do charge a fee, some lenders may allow you to add it to your mortgage advance instead of paying it upfront, which can help save on immediate costs. However, it’s important to be aware that this could increase the total cost of your mortgage deal.

Because average fixed mortgage rates are significantly lower than standard variable rates, which is the default rate you move onto once an initial deal ends, it’s worth researching your options if your current deal is expiring soon.