According to research by mform.co.uk mortgage fees are approximately 20% higher than they were a year ago.

The research found that in August 2007 the average application fee was £738.33, the cost in July 2008 had raised to £889.69 an increase of 20.5%. Fees for three-year fixed-rate mortgages, one of the most popular products available, rose the most over the last year from £590.40 to £938, an increase of 58.8%. One of the products which saw the smallest rise were discounted-rate mortgages, on average they saw an increase in fees of 11% from £857.20 to £951.62.

With fees on the most popular products increasing at such an alarming rate it is important for borrowers to take into account the full ‘true’ cost of the mortgage they are considering. Borrowers now need to look beyond the initial interest rate deal and take into account the extra costs that they are also signing up for.

Francis Ghiloni, marketing and business development director at mform.co.uk, told PIN: “While the Bank of England’s base rate may have remained relatively stable, the rates and fees we can expect from lenders have shot up. There are two main reasons for this, firstly the cost of borrowing has shot up for mortgage lenders while capital remains in short supply. The second reason is that many lenders are looking to improve the quality of their balance sheets by only lending to those with significant equity in their property and a strong credit history and for those who don’t fall into this category rates and fees are going to be higher.”