Mortgage product fees are rising while cashback options are dwindling – signalling that the market is subtly becoming more expensive, Moneyfacts analysis shows.
The average fee currently stands at £1,129 for a fixed rate mortgage, rising by £89 since March 2020 – despite the inflation that’s taken place over that period.
Meanwhile there are 9% fewer cashback options over the same period.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The lowest fixed mortgages on the market typically charge upfront fees of around £1,000, or even up to £2,000, so a mortgage with a slightly higher initial fixed rate and lower product fee could be a better choice.
“Deeper analysis of the availability of mortgage incentives shows a proportional decline in the quantity of deals that do not charge a product fee, down to 36% from 41% five years ago, but slightly higher from 35% in March 2024.
“However, one incentive in continuous decline has been in the proportion of deals that pay cashback, as there are now less than a third of deals with this sweetener attached, across all fixed mortgages.
“Borrowers coming off a fixed deal may have to face higher mortgage rates this year, but they can still find an abundance of deals with cost-saving incentives, and it’s still cheaper to refinance onto a fixed rate than reverting onto a Standard Variable Rate (SVR).”
The proportion of the market offering fixed rate mortgage deals that offer a free or refunded legal fees incentive has fallen to 42%, from 49% at the start of March 2020.
Springall added: “More often than not, borrowers can find a deal with a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees.
“Those looking to remortgage will likely want to keep costs down and refinance without too much effort, so mortgage bundles are a great choice to avoid the worries of covering upfront fees.
“First-time buyers may also have exhausted all their disposable cash on a deposit, removal and furnishing costs, so a cashback deal with a bundle of incentives could be ideal.
“Lenders could also add upfront fees to the mortgage advance, so it’s wise for borrowers to seek advice to navigate all the options available to them before they commit.”
Via @PropertyWire