According to recently released information from finance comparison website Moneyfacts, fee-free mortgage products have been increasing in the market over the last year. Lenders who still charge fees have also been reducing their fee amount too.
Typically, a lot of lenders will place a fee on some of their more competitive rates and products so that they can manage the amount of borrowers wanting to benefit from the usually low rate and ensure that they remain profitable. Most lenders will normally charge between £999 – £2,000 for a particularly popular and competitive product however, according to Moneyfacts recent research, the number of lenders offering fee-free products has increased significantly and for those that still charge fees, they are reducing the actual amount they will charge across the board.
According to the new data release, the proportion of the market offering fixed rate mortgage deals that do not charge a fee has risen from 35% in June 2021 to 40% at the start of this month. Also, the data suggests that the average rate gap between fixed deals that carry a product fee and those that do not has narrowed, currently at 0.03%. Compared to last year, the gap was 0.21%. Lenders offering cashback with their products has also increased.
Table of data released by Moneyfacts (Source: Moneyfacts.co.uk)
What Moneyfacts Have Actually Said About Fee-Free Products
Representative for Moneyfacts Rachel Springall says: “Mortgage rates may be on the rise but it’s not all bad news for borrowers as they can still find an abundance of options to help them save on the upfront cost of their deal. Mortgage fees have fallen on average on fixed deals, and there are now more fee-free offers available. Weighing up a deal on its true cost is vital, particularly as the rate gap between average fixed rates with a product fee and those without has reduced.
Due to the changes in the mortgage landscape borrowers may find themselves better off by looking beyond headline-grabbing fixed initial rates, especially as interest rates continue to rise. Indeed, back in September 2021, there were various lenders offering sub-1% mortgage deals, but that same month the average mortgage fee was just £16 shy of the record high recorded in 2012. Low-rate fixed mortgages can carry some of the highest fees, so they may not be the best choice for every borrower, so seeking independent advice to assess the overall deal is wise.”
What The Mortgage Experts Say About Fee-Free Products
Content and Communications Manager at Oportfolio Mortgages Louis Mason had this to say: “Well, isn’t this nice news to come back to after the bank holiday weekend? A lot of people who could really benefit from certain mortgage products and rates are often ostracised because they can’t afford to pay the product fee, or their mortgage affordability won’t allow them to borrow the mortgage they need and add the fee to the loan.
By reducing the product fees or completely removing them, the lenders have really thrown a lot of people a lifeline and are showing to us that they are increasingly on the side of the client. We all look forward to seeing what new and exciting rates and products without fees or relatively low fees are on the horizon for the mortgage world.”
If you or anyone you know is wanting to look at their mortgage options and would like to speak to an expert about fee-free products, please feel free to give our helpful and friendly team a call.
