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Average Mortgage Application Fees up by 20* Per Cent Since 2009


News provided by

moneysupermarket.com

11 Jun, 2012, 15:03 GMT

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CHESTER, England, June 11, 2012 /PRNewswire/ --

  • Borrowers should look beyond headline rates to find best the priced deal
  • Lower rates don't always mean the best deals - check the product fees as well as the interest rates

Mortgage customers should not be blinded by low interest rates on products, as high fees could mean they end up paying more for their borrowing than necessary, according to research by MoneySupermarket.

Analysis by the UK's number one comparison site found fees for fixed and tracker mortgage products have increased by over 20 per cent since September 2009, making it more difficult for borrowers to compare the true cost of mortgages. Products with the lowest headline rates are not necessarily the best value over the term of the deal as once fees are factored in, a product with a slightly higher rate but lower set-up costs may actually prove cheaper.

For example, the lowest two-year fixed rate mortgage is from HSBC at 2.64 per cent, however adding the combined booking and arrangement fee of £1,999 means the total amount to be paid back over the two years for someone borrowing £150,000 is £18,404.20. The same amount borrowed over two years with Bank of Ireland at a higher rate of 2.78 per cent, and a fee of only £799, would cost £17,461.48 - a saving of £942.72 over the two year period, despite the interest rate being 0.14 percentage points higher.

Clare Francis, mortgage expert at  MoneySupermarket.com  said: "It's very easy for borrowers looking for a new mortgage to be attracted by low headline rates; however it is vital to consider the account arrangement and booking fees as part of the overall cost. Fee costs can vary greatly between providers so taking the time to work out the total amount you have to repay over the term of the offer is essential.

"That said, for some people it may be worth paying a high fee in order to benefit from the lowest interest rate. It will all depend on the amount you are looking to borrow - on large mortgages a high fee can be worth paying in order to secure a low rate. However, with smaller mortgages, where a high fee will form a larger proportion of the overall loan size, it may work out cheaper to keep the set up costs low even if it means paying a slightly higher monthly payment.

"When comparing mortgages you should always look at the total amount you would repay, including fees, over the term of the deal. This is the only way to identify which product will be the best value to you. Think about whether you want a fixed or variable rate deal, and if you do opt for a variable rate mortgage you need to ensure that you will be able to afford your monthly repayments if and when interest rates do rise as they won't stay at this level forever."

Notes to Editors

*Average Mortgage Fees (Not Inc % Fees)

                                                   Application  Booking
             Total    Application Fee Booking Fee      Fee        Fee
           Number of      (Fixed         (Fixed     (Tracker   (Tracker
            Products     Products)     Products)    Products)  Products)
    Sep-09    2223        GBP705         GBP334      GBP772     GBP247
    Mar-10    2599        GBP704         GBP276      GBP791     GBP296
    Sep-10    3200        GBP699         GBP274      GBP818     GBP354
    Mar-11    3127        GBP802         GBP343      GBP890     GBP254
    Jun-11    3105        GBP846         GBP332      GBP921     GBP237
    May-11    2177        GBP806         GBP280      GBP954     GBP314
    Jun-12    2271        GBP812         GBP272      GBP961     GBP316

Sourced by MoneySupermarket.com on 11.06.2012

2 Year Fixed Rates - Based on a £150,000 mortgage

                                                          Total Cost
      Lender   Pay Rate   Period    Max LTV  Arr/Bkg Fee over 2 Years
    HSBC        2.64%    30-Sep-14    60%     GBP1,999   GBP18,404.20
    Bank of
    Ireland UK  2.78%    31-Mar-14    65%      GBP799    GBP17,461.48
    Santander   2.99%    02-Aug-14    60%      GBP995    GBP18,047.96

Sourced by MoneySupermarket.com on 11.06.2012

    3 Year Fixed Rates - Based on a GBP150,000 mortgage
                                                        Total Cost
     Lender  Pay Rate   Period    Max LTV  Arr/Bkg Fee over 3 Years
    Bank of
    Ireland
    UK        3.25%    31-Mar-15    75%      GBP799    GBP27,113.92
    Leeds BS  3.25%    31-Aug-15    75%      GBP999    GBP27,313.92
    Post
    Office    3.39%    31-Aug-15    75%     GBP1,495   GBP28,211.32
    Leeds BS  3.49%    31-Aug-15    75%      GBP999    GBP28,003.68
 

Sourced by MoneySupermarket.com on 11.06.2012

    5 Year Fixed Rates - Based on a GBP150,000 mortgage
                                                                      Total Cost
      Lender     Pay Rate     Period      Max LTV     Arr/Bkg Fee    over 5 Years
    Bank of
    Ireland UK     3.49%     31-Mar-17      75%          GBP799      GBP45,806.80
    Coventry BS    3.69%     30-Jun-14      65%          GBP499      GBP46,477.60
    Yorkshire
    Bank           3.79%     31-Jul-17      65%          GBP999      GBP47,467.20
 

Sourced by MoneySupermarket.com on 11.06.2012

    Capital & Interest     HSBC     Bank of Ireland UK  Santander
                        Total Cost
                       over 2 Years Total Cost over 2   Total Cost
                         (2.64% 2         Years        over 2 Years
                       year fixed +   (2.78% 2 Year      (2.99% 2
                         GBP1,999     Fixed + GBP799   Year Fixed +
       Loan Amount         fee)            fee)        GBP995 fee)
        GBP50,000      GBP7,467.40     GBP6,353.08     GBP6,679.40
        GBP100,000     GBP12,935.80    GBP11,907.40    GBP12,363.56
        GBP120,000     GBP15,123.16    GBP14,129.08    GBP14,637.32
        GBP130,000     GBP16,216.84    GBP15,239.80    GBP15,774.20
        GBP140,000     GBP17,310.52    GBP16,350.76    GBP16,911.08
        GBP150,000     GBP18,404.20    GBP17,461.48    GBP18,047.96
        GBP160,000     GBP19,497.88    GBP18,572.44    GBP19,184.84
        GBP170,000     GBP20,591.56    GBP19,683.16    GBP20,321.72
        GBP180,000     GBP21,685.24    GBP20,794.12    GBP21,458.36
        GBP200,000     GBP23,872.60    GBP23,015.80    GBP23,732.12
        GBP250,000     GBP29,341.00    GBP28,569.88    GBP29,416.52

Sourced by MoneySupermarket.com on 11.06.2012

MoneySupermarket.com's customer commitment

  • No other site compares more prices or products
  • We are independent so only find the best deals for you  
  • The price you see is the price you pay - you don't need to go direct and you won't get a better deal doing so  
  • Your details are safe with us and we won't sell them to anybody

MoneySupermarket.com compares (at 29th March 2012)

  • 98 car insurance providers and 81home insurance providers
  • 11 broadband providers and 18 energy providers  
  • 31 unsecured loan and 5 secured loan providers
  • 62 mortgage lenders and 28 credit card providers
  • 67 savings providers and 37 current account providers.
  • Over 1,750,000 mobile phone deals

We promise to be clear and impartial

  • All the products in our full search results tables are displayed in a completely unbiased manner.
  • We don't add fees or commissions on to the prices we compare.
  • There may be times when another site compares more companies than us on a particular product, perhaps because of market changes or technical issues. You'll be able to see this and know we are working hard to fix it.

We promise to be trustworthy

  • We never use your data to make unwanted sales calls or send you spam.
  • We never pass your personal information to third parties unless you give us permission to do so.
  • Even if you choose to receive additional information from us, you can opt out at any time.
  • We promise to be supportive.
  • You can use our community forum to get information and help from other customers.

If you need further help or support, you can contact our sales advisors or customer services agents.

For further information please contact:

Paul Lawler
PR Manager Financial Services
+44(0)1244-370371
+44(0)787-237-9545
paul.lawler@moneysupermarket.com

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