Rise in mortgage arrangement fees

Arrangement fees for the best mortgage deals have jumped by an average of 20% during the past year as lenders try to claw back higher borrowing costs, figures show.

The average fee borrowers have to pay for a best-buy mortgage has risen from £738.33 in August last year to £889.69 now, according to mortgage firm mform.co.uk.

The increase for arrangement fees on three-year fixed-rate mortgages has been even more dramatic, with fees on these deals soaring by nearly 60% during the past year to average £938.

The jump has been less dramatic for best-buy discount mortgages, with charges rising by 11% compared with August last year to average just over £950.

But it is consumers who want to take out a leading two-year fixed-rate mortgage who face the biggest outlay in charges, with arrangement fees for these deals now averaging £1,058, despite falling by 3% during the past 12 months.

Francis Ghiloni, marketing and business development director at mform.co.uk, said: "With the current challenges facing the mortgage market, it is not surprising to see that fees have risen by so much.

"This means that it has never been more important to look at the true cost of your mortgage, taking into account the interest rate but also any fees and charges that you have to pay."

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