Moneyfacts research showed there are currently 4,500 mortgage products available on the market, with an average mortgage fee of £956.
The average fee for a fixed-rate mortgage is £964, while the average variable mortgage fee is £933.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “The current mortgage market boasts some of the lowest rates on record, which is great news for borrowers, but the increase in the average mortgage fee clearly shows that some of these headline grabbing rates are being compensated for elsewhere.”
She said some fees are nothing short of shocking, with up to £7,499 being charged on some high value loans.
“While arrangement fees allow lenders to offer a lot more flexibility within their ranges, the cost of administering the mortgage does not vary that greatly from one case to the next, which could lead many to wonder why there is such a big difference between the fees charged and why they are even charged in the first place,” she said.
Nelson argued that both providers and borrowers tend to focus on the interest rate, which means the cost of a large fee may not be factored in. She said high fees can impact the cost-effectiveness of a deal, particularly when they are added to the mortgage advance, as they will push up the size of the monthly payments.
While borrowers are encouraged to switch once their fixed-rate deals come to an end, large fees can make moving to a new deal costly, particularly if the borrower prefers a short-term mortgage, she said.
“Borrowers would therefore be wise to look at the true cost of the mortgage, taking into account any fees and incentive packages to ensure that the most cost-effective deal is obtained,” Nelson added.