Rising fees and less cashback: the other struggles facing today’s mortgage borrowers

Borrowers are encouraged to compare other factors, aside from just interest rates, to find the best deal for their needs.

Those currently looking for a mortgage have more than high interest rates to contend with, as recent analysis conducted by Moneyfactscompare.co.uk revealed a typical fixed deal continues to cost over £1,000 in product fees and fewer are offering cashback as an incentive.

Standing at £1,129 on 27 February 2025, product fees are £34 higher on average compared with two years ago, and £89 more expensive than five years ago – much to the dismay of borrowers coming to the end of a fixed term. In a further blow, those wanting to avoid upfront costs now have a much smaller portion of the market to consider, as the percentage of deals charging no additional fees declined from 41% in March 2020 to 36% five days ago.

Meanwhile, the portion of the mortgage market offering cashback as an incentive also shrank from 31% to 22% over the same period – giving borrowers less opportunity to offset rising costs.

Factors such as these compound the ongoing issue of affordability. Those who took out a five-year fixed deal in March 2020 at the average rate of 2.74% already need to budget an additional £273 each month if they were to lock into a typical five-year fixed deal today (charging 5.22%) *.

Nevertheless, Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said there was still an “abundance of deals with cost-saving incentives” to be found, and reminded borrowers “it’s still cheaper to refinance onto a fixed rate rather than reverting onto a Standard Variable Rate (SVR)”.

Overcoming the obstacles

Rising product fees demonstrate the importance of considering all factors – not just the interest rate – when comparing deals.

“The lowest fixed mortgages on the market typically charge upfront fees of around £1,000 or even up to £2,000, so a mortgage with a slightly higher initial fixed rate and lower product fee could be the better choice,”  said Springall.

However, she emphasised “the best deal depends on someone’s circumstances”, and added that borrowers with a large debt may prefer a lower interest rate, while those wanting to keep costs to a minimum may prioritise fee-free deals or those with enticing incentives.

Remortgage borrowers, meanwhile, “will likely want to keep costs down and refinance without too much effort, so mortgage bundles are a great choice to avoid the worries of covering upfront fees”, Springall explained. As for first-time buyers who have scrimped and saved for a deposit, removal costs and furnishings, “a cashback deal with a bundle of incentives could be ideal”, she concluded.

With over 6,500 mortgages currently available to choose from – more than half of which come with a free or refunded valuation, and a third which include free or refunded legal fees – there are plenty of options to consider. But, for help navigating the market and finding a mortgage that best meets your needs, consider seeking expert advice from a mortgage broker.

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give advice.

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