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Mortgage product fees fall despite base rate rise

by: Shekina Tuahene
  • 29/07/2019
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Mortgage product fees fall despite base rate rise
Research has shown that despite the Bank of England raising base rate by 0.25 per cent to 0.75 per cent on 2 August 2018, competition among mortgage providers has seen the average two-year fixed mortgage rate in July fall from 2.53 per cent to 2.49 per cent year-on-year. 

 

The data from finance comparison website, Moneyfacts.co.uk, showed this competition appears to have also resulted in a fall in mortgage product fees at most loan-to-value (LTV) tiers as well. The average product fee for maximum 65 per cent LTV fell the furthest, recording a £262 drop since July last year to £881.  

The average product fee at the highly competitive maximum 95 per cent LTV tier also fell, declining by £46 over the past 12 months to stand at £914. 

 

Two-year fixed rate mortgages 
LTV  Number of products available    Products with no product fee    Average product fee*   
  Jul-19  Jul-18  Jul-19  Jul-18  Jul-19  Jul-18 
95 per cent  144  122  88  62  £914  £960 
90 per cent  291  276  131  107  £985  £1,002 
85 per cent  264  238  109  91  £987  £1,020 
80 per cent  230  231  86  87  £1,062  £1,083 
75 per cent  284  280  97  97  £1,055  £1,088 
70 per cent  97  93  27  27  £1,198  £1,174 
65 per cent  26  24  10  6  £881  £1,143 
60 per cent  187  180  65  60  £1,208  £1,193 
Up to 55 per cent  15  6  3  1  £790  £779 
*Average product fee calculation excludes products with no fee. Source: Moneyfacts.co.uk 

 

Darren Cook, finance expert at Moneyfacts.co.uk, said: “The mortgage market has recently boasted some of the lowest mortgage rates on record, which is fantastic news for borrowers, but our latest research into the average product fee charged in the popular two-year fixed rate market has shown that this too has fallen over the past 12 months. 

“Potential first-time buyers who are likely to be looking at higher LTV mortgages will be pleased to see that two-year fixed rate products at maximum 95 per cent LTV not only have one of the lowest average fees at £914, down £46 from last year’s average, but the average interest rate for this product has fallen from 3.98 per cent 12 months ago to 3.25 per cent today.”

He added, furthermore, the number of fee-free deals at maximum 95 per cent LTV has risen from 62 to 88 products over the past year, which constitutes 72.13 per cent of all products within this sector. 

 

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