Mortgage lenders are hiking their fees along with their rates, with the average arrangement fee rocketing from £517 to £860 in just 18 months.
The research, from comparison site Moneyexpert.com, found that the number of fixed rate mortgages charging more than £750 has increased 14-fold (1,368%) during the same period.
The news comes just two days after the Bank of England announced that the rates on certain fixed rate deals jumped to an eight year high during May.
The average cost of a two-year fixed rate mortgage for someone with a 25% deposit rose by 0.21% during May to 6.27%, the Bank said. The last time it reached those levels was September 2000, when interest rates were at 6%.
High fees now commonplace
Before the credit crunch struck in the UK, there were only 22 fixed rate mortgage deals that charged application fees of £750 or more, according to MoneyExpert.com.
That figure has since grown to some 323 fixed mortgages, or 34% of the total fixed mortgage market.
Similarly, the highest stipulated fee back then was £1,499 on Halifax's two-year fixed mortgage for homeowners with a 25% deposit or more. Now, Halifax charges a fee of £3,999 on a three-year fixed deal for its existing customers who have homes worth between £500,000 and £2 million.
It just keeps getting worse
As if things weren’t bad enough for mortgage hunters, there appears to be a growing trend towards non-refundable arrangement fees.
Abbey has just introduced a £150 fee on its mortgage range that won’t be reimbursed, following hot on the heels of Lloyds TSB’s £99 levy. "Another week, another kick in the teeth for mortgage borrowers,” says Drew Wotherspoon of brokers Charcol.co.uk
"There are many things that can happen during a mortgage application that may result in a borrower being unable to complete, a great deal of which a lender can be accountable for. Traditionally, this has not cost borrowers anything other than wasted time and maybe some legal fees. However, should they not complete on a mortgage with an up front fee now, it will cost them actual cash.
“I would expect some other lenders to follow Abbey and start to make part of their arrangement fee compulsory," Wotherspoon concludes.
