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Application fees on best buy deals double

Application fees on the best buy fixed-rate mortgage deals have nearly doubled in the past year, claims Mform.co.uk.

The price comparison website is urging borrowers who will shop around for a new deal to focus on the true cost of their loan, taking into account fees, along with the initial monthly payment.

Mform.co.uk says that with up to 116,000 people each month coming to the end of fixed rate deals, many could be in for a shock when it comes to choosing a new mortgage, because of rising fees.

During the last year alone, the website says that fees on the five most competitive two-year fixes have moved from an average £999 to £1,478.

For three-year deals the average fees have moved from just £578 to £1,132.

The website says higher fees are the latest hurdle faced by borrowers, as most can expect to see no savings on their initial monthly payments on their new fixed rate mortgages, despite last week’s Bank of England rate cut.

Last October, when base rate was 5.75%, the average interest rate of the top five two-year fixed rate mortgages was 5.67%, but now it is just 5.59%.

Mform.co.uk’s studied the top five two and three-year fixed rate mortgages in March 2007 and April 2008.

Francis Ghiloni, marketing and business development director at Mform.co.uk, says: “After all the panic of recent weeks in the mortgage market people may be tempted to grab the best deal they can and may focus on rates to the exclusion of everything else.

“They could be in for a nasty shock when it comes to the fees charged as they have rocketed in the past year.”

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