Switchers face fee shock

Application fees on best buy fixed rate mortgages have almost doubled in the past year.

Mform.co.uk says that the 116,000 people coming to the end of their existing fixed rates each month on average could be in for a remortgaging shock because of soaring fees.

The price comparison website says that in the past year, fees on the five most competitive two-year fixed rates have increased from an average of £999 to £1,478.

And for three-year deals, the average fee has increased nearly 96% from £578 to £1,132.

The website is urging borrowers shopping around for new deals to focus on the true cost of loans, taking app-lication fees into account as well as monthly repayments.

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

“But they could be in for a shock when it comes to the fees because these have rocketed in the past year.” Ghiloni claims there are still some good deals avail-able for borrowers who have strong credit ratings and substantial deposits or equity.

He adds: “Unfortunately, many consumers will not be eligible for these deals as lenders are taking an increasingly hard line.”

Lawrence Hayward, managing di-rector of Moodybrook Financial Services, says: “Two years ago fees were not an issue but now it seems lenders are all jumping on the bandwagon and raising them.

“I believe they are trying to squeeze a bit more margin for themselves and they will do this if they can get away with it.”

Mform.co.uk reports that the best true cost mortgages currently available include two-year fixed rates from West Bromwich, the Cheshire and HSBC at 5.49%, 5.99% and 5.54% respectively.

The website says borrowers should expect no savings on monthly repayments on new fixed rates despite the recent base rate cuts.