Rates rise but fees fall on UK mortgages

By MoneyhighStreet Staff. Published on August 20, 2008 This post currently has no comments.

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While the rates on mortgage deals have risen since the credit crunch took hold last year, new research has shown that the fees charged by lenders have actually fallen.

Analysis from moneysupermarket.com indicated that the average best rate on a two-year fixed-rate deal from one of the country''s major lenders has risen from .73 per cent last August to 6.15 per cent now.

However, during the same period the typical best fee for a two-year fixed deal has dropped from £2,149 to £1,334.

Louise Cuming, head of mortgages at moneysupermarket.com, explained that lenders currently did not have to rely on their headline rates to attract customers.

"Often a great headline rate has come with an extortionate fee, but lenders are being much more transparent now about the true cost to the consumer and where their profit comes from," she added.

"Higher rates might seem unpalatable for some people, however those lower fees can make it cheaper for borrowers on a smaller mortgage. Consumers must look at both the fee and the rate if they want to work out the best deal for them."

Recently, the National Association of Estate Agents reported it appeared that while there were signs the housing market was beginning to level out consumers still had concerns about the future direction of prices.