What's happening in the fixed rate market?

The fixed mortgage market landscape is experiencing a shift, with notable increases observed in the average fee associated with fixed rate mortgage deals.

Recent analysis from price comparison site Moneyfactscompare.co.uk found not only an increase in the average fixed rate fees, but also a reduction in various incentives previously offered to borrowers.

Currently, the average fee for fixed rate mortgage deals, excluding those without any fees, stands at £1,141, marking a rise of £46 since March 2023 and reflecting growing costs for consumers seeking mortgage deals.

Meanwhile, the availability of incentives traditionally used to attract borrowers is on the decline. The proportion of fixed rate mortgage deals offering free or refunded valuation fees has decreased to 73%, down from 75% in early March 2023. Similarly, offers that include free or refunded legal fees have seen a slight drop, moving to 44% from 45% in the same period.

A significant reduction has also been observed in the availability of cashback offers, which have fallen by 9% since March 2023.

“Borrowers concerned about rising fixed mortgage rates would be wise not to rush when comparing deals and ensure they consider the overall true cost package, as the average mortgage fee has crept up,” said Rachel Springall (pictured), finance expert at Moneyfactscompare.co.uk. “There is an abundance of deals to suit different needs, some may be headline-grabbing rates, but these can also charge a high upfront fee.

“The best mortgage will come down to how much someone needs to borrow and for how long, so seeking independent advice to crunch the numbers is wise. Those borrowers looking to remortgage right now will find some of the lowest rates will cost them more than £1,000 in a product fee, but a mortgage with a slightly higher initial fixed rate and lower product fee could be a better package based on true cost.

Springall added that mortgage interest rates remain volatile, and this may well be the case for the next few weeks.

“However, even if borrowers lock into a rate that’s slightly higher than what may have been available a few weeks ago, borrowers could still get an attractive package by finding a deal that has some cost-saving incentives, a reasonable product fee, or no fee, and maybe even cashback,” she said. “It would also be more cost-effective to move off a standard variable rate and onto a fixed deal, based on average rates.

“First-time buyers might need to save on the upfront cost of their deal or opt for a mortgage that comes with a bundle of incentives, such as cashback. These packages may be more suitable if new buyers have exhausted all their savings on a deposit, removal and furnishing costs.

“The majority of the fixed mortgages on the market will offer borrowers a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees. Just over a third of fixed mortgages on the market do not charge a product fee, and on those deals that do charge a fee, some lenders can allow borrowers to add it to the mortgage advance. These options can save borrowers on the upfront cost of their deal, but it’s vital to be conscious of the true cost of any mortgage before they apply.”

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