Mortgage fees rise 17pc

Yuan Phoon

August 17, 2011

The highest fee on the market is £3,800, which is being charged by Accord Mortgages through selected intermediaries.

Precise Mortgages charges the highest percentage arrangement fee at 2.00% for their large loan sizes between £300,000 to £1m.

Only 12% of mortgages charge no arrangement fee.

Michelle Slade, spokeswoman for Moneyfacts, said: “Lenders appear to be offsetting the low mortgage rates on offer by increasing the arrangement fees.

“The average arrangement fee has increased by 17% as lenders battle it out to offer the lowest headline rate.

“Percentage fees have become increasingly common with one lender charging as much as 2%.

“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.

“In many cases a low rate with a high fee can work out more expensive than opting for a slightly higher rate, but with a lower fee.

Slade said that 12% of mortgages charged no arrangement fee and many of them regularly appeared on the Moneyfacts best buy tables, which are based on true cost.

“With 2,873 mortgages available there is a raft of rate/fee combinations for borrowers to consider,” she said.

“The key to deciphering the maze of thousands of mortgages and getting the best deal is for borrowers to do their homework and shop around.”

Rachel Gladman, spokeswoman for Accord, said: “Accord’s products are priced specifically for the intermediary market. The product mentioned is specially designed for borrowers wishing to borrow between £750,000 and £1.5m and a fee-free version of this product is available.

“A fixed fee of £3,800 compares more favourably on a large loan size than a 2% arrangement fee. For example, a borrower looking for a loan of £750k would have to pay £15,000 on a product with a 2% arrangement fee, whereas on our deal the fee is fixed at £3,800.

“This product is one of many in Accord’s range and as it is designed for a specific area of the market it is difficult to compare with it with standard high street deals.

“The Accord range includes products without fees and also deals with a range of incentives, designed to allow intermediaries a range of options to suit the needs of their clients.”

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