Mortgage fees could reach £2,700 by 2016

Moneyfacts.co.uk has investigated the rapid growth in mortgage fees over the last 10 years, and predicts that mortgage fees could be as much as £2,700 by 2016 if the trend continues at the same rate.

A spokeswoman for Moneyfacts, says: “Ten years ago, mortgages fees averaged £300, today this figure has trebled, to an average cost in excess of £900. Combine this with the rising stamp duty burden, and the possibility of further interest rate rises, and the result will be that moving home or changing mortgage providers will be an even more costly exercise.

“With competition in the mortgage market driving down profit margins on rates, lenders have sought to recoup income by means of higher fees. Not only have flat fees risen, but there is also a trend for lenders to use percentage fees, now up to 2.5% of the mortgage advance.

“There is also an alterative motive for the lenders to generate additional fee income. When predicting business performance forecasts to shareholders, fee income can be used to predict growth, whereas interest turn is excluded.”