Mortgage holders face higher fees as rates decrease
Mortgage holders are facing increased fees, with lenders raising their arrangement fees by up to 60%. Despite mortgage rates coming down, some leading fixed-rate deals are now more expensive than those available in July. Skipton Building Society charges £2,995 on its five-year deals, while other providers are also increasing their fees, offsetting the rate decrease. According to Which?, borrowers could have secured cheaper deals back in July.
The average fee for a product with a 40% deposit has risen by 61% since July. Fee-free deals are now rare on market-leading rates. Lenders have made more significant price cuts for those with higher deposits.
Source: The i
As commercial finance brokers, we’re seeing the increase in arrangement fees across the board from lenders. In particular, we’re frequently seeing the same lender offering 2 or 3 different mortgage deals whether that’s on commercial property or buy-to-lets. Often a lender will have a lower interest rate with a higher arrangement fee and visa versa, at the end of the fixed term, whether that’s 2, 3, or 5 years, there’s very little difference in the overall amount paid.
The key difference for many of our clients is affordability, whether you go for a lower interest rate and subsequently a lower monthly payment with a higher arrangement fee or a higher interest rate and higher monthly payment with a lower arrangement fee.