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Mortgage fees have rocketed by more than 25% in last three years

The average mortgage fee has increased by more than £300 in the past three years, the latest figures from Moneyfacts.co.uk show.

Its research reveals that although residential mortgage rates have continued to fall in most cases compared with three years ago, fees have continued to go up, with the average fee now £1,502 compared with £1,181 in 2009.

Meanwhile, Capital Economics forecasts that average mortgage rates will be 3.75% in 2012 and remain so throughout 2013, compared with 3.50% in 2011.

In its UK Housing Market Analyst report for Q2 2012, it says: “Over the past six months or so, upward pressure on banks’ funding costs caused by financial market tensions stemming from the eurozone has pushed up average mortgage interest rates on fixed rate and tracker products by about 0.50%. Nevertheless, at about 4% or less, average rates are still low by historical standards.”

Capital Economics analysis’ shows mortgage rates would have to rise above 6% before the average borrower began experiencing difficulties making mortgage payments.

The report adds: “For most would-be borrowers the biggest constraint is the ability to access mortgage credit in the first place rather than the cost of a mortgage. “And there is precious little chance of improvement on this front.”

It also predicts house prices will drop by 5% in both 2012 and 2013 as a result of mortgage affordability and lenders being less generous with forbearance measures.

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