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Rise in the number of fee-free mortgage deals

by: Mortgage Solutions
  • 30/11/2016
  • 0
The number of fee-free deals available to those looking for a fixed-rate mortgage has more than doubled over the past year, according to Moneyfacts.

The financial information provider said this has given borrowers looking to minimise upfront costs even more choice.

A year ago there were 556 fee-free fixed rate deals, compared to 1,162 today.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “It’s great news that the number of fixed rate deals without a fee has increased by a staggering 606 products. With more deals now than ever offering a no-fee option, it is clear to see that lenders are trying to compete in ways beyond just the headline rate.”

At the same time as the number of fixed-rate deals with no fee has increased, Moneyfacts noted that the average fixed-rate fee has increased too, rising from £954 to £984 over one year.

“This is mainly an attempt by providers to compensate some of their low rate deals with a higher fee,” explained Nelson, “particularly as the average two-year fixed rate has fallen from 2.67% to 2.34% in the last 12 months.

“Fees can soon mount up, particularly if a borrower opts for a two-year deal and remortgages after the deal expires. This can make ignoring fee-free options a costly mistake, as the amount paid on the fee could instead be better spent overpaying the mortgage.

“It is important that borrowers looking for a mortgage ensure they do their homework and work out the true cost of a deal, looking at the rate, fee and any incentive package, so they can be sure they have found the most cost-effective option.”

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