The average application fee for a discount mortgage is now £407, while for a fixed-rate mortgage it is £494.
Fees have increased as mortgage lenders have sought to improve profits while interest rates remain low, MoneyExpert.com believes. The Bank of England has now kept the base rate at 4.5 per cent for 11 months in a row.
MoneyExpert.com's analysis showed average application rates for discount mortgages have increased from £354 a year ago to £407 now, a rise of 15 per cent. However, for fixed-rates the increase has been 22 per cent from £402 to £494.
Yet these are the average gigures. Some discount loans charge as much £749, while some fixed-rates levy fees to £1,099.
Sean Gardner, MoneyExpert.com’s chief executive, said: “Borrowers need to budget for application fees when they take out a mortgage and particularly those who are remortgaging. What you believe is a cheap deal saving you, for instance, £100 a month won’t look quite so good when you add on application fees.
“It is no surprise that mortgage firms charge application fees on discount and fixed-rate mortgages as they have not seen a rise in the base rate for 10 months and are seeking to improve profit margins.
“It still makes sense to remortgage and borrowers should always look out for the best deal possible. However researching your mortgage should include looking into fees as well as simply focusing on the headline interest rate.”
Avoiding application fees is difficult. Out of around 450 discount mortgages on the market, up to 62 per cent charge a fixed application fee while another 5 per cent charge variable fees. Around a third do not charge application fees.
Out of the 730-plus fixed-rate mortgages currently on offer around 68 per cent charge a fixed application fee while about 13 per cent levy variable fees. Around 19 per cent do not charge application fees.
