Cash point

Mortgage lenders are competing with rock bottom interest rates on home loans, but it’s the opposite when it comes to fees.

Research from data firm Moneyfacts.co.uk shows the average mortgage fee is £1,005 – the highest average recorded in over five years.

Fees vary widely with some products free while others cost up to £1,999. So it’s vital borrowers do their sums and ensure they really are getting the best deal.

A low interest rate with a high fee can be ideal for those with larger loans and over a longer term, but not for people with smaller loans and over just two years. Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Despite the Bank of England increasing the base rate twice since November 2017 – from 0.25% to 0.75% – mortgage rates are still far lower than providers’ costs.

“For example, the average two-year fixed rate stands just 0.16% higher than November 2017, increasing from 2.33% to 2.49%.

“By increasing fees, providers are making a small attempt to recoup some of this extra cost.”