According to Moneyfacts, the average fee attached to a fixed rate mortgage is just £1 more than December last year when this came to £1,107. While the payable fee has remained the same, there are fewer fee-free options on the market.
As of November, 35 per cent of mortgages available had no fee while in December last year, this accounted for 44 per cent of the market. In numbers, this represented 1,767 options at the end of November and 1,350 in December last year.
However, the number of fee-free mortgages has risen over the month with 1,690 available at the start of November.
Over the month, more mortgages have been added with incentives such as free or refunded legal fees and cashback.
At the start of November, 2,050 mortgages offered free or refunded legal fees making up 42 per cent of deals on the market but this has since increased to 2,216 products, making up 44 per cent of options.
Some 70 per cent, or 3,434, mortgages had a free or refunded valuation incentive at the start of November. Since then, this has gone up to 3,809 products representing 76 per cent of deals.
A quarter of mortgages, or 1,225 deals, offered cashback earlier this month. This now sits at 26 per cent or 1,317 of the options available.
Mortgages with a fee tend to have a higher rate at 6.23 per cent compared to 6.09 per cent for fee-free options.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “As interest rates on fixed mortgages gradually fall, it’s positive to see lenders are conscious of the incentives on offer to borrowers. However, borrowers need to be wary of the upfront cost of their mortgage as average mortgage fees have risen. There are fee-free deals out there and incentive packages could be ideal for borrowers who have limited funds to cover the cost of a new deal, some could even pay cashback. A free valuation incentive is offered on most fixed rate mortgages in the market. There are even more now compared to the start of November 2023, but in addition, there are now more deals that offer free legal fees, cashback or do not charge a product fee.
“Low-rate mortgages undoubtedly grab attention, but amid a cost of living crisis it is becoming ever more critical that borrowers find ways to save money upfront as well as over the lifetime of their mortgage. The average product fee stands above £1,000, and low-rate mortgages can carry some of the highest fees, so they may not be the best choice.”
She added: “Borrowers looking to refinance could make substantial savings by switching their mortgage if they are sitting on their standard variable rate. If someone has little cash to pay for the upfront costs of a new deal, they can find fee-free offers or those that cover legal fees, a valuation or even pay cashback – there are even lenders who will offer all these combined. Those buying a home for the first time could well have exhausted their savings and may benefit from a mortgage deal with a bundle of incentives.”