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Mortgage fees jump

Date: Mon, 18 Oct 04 Analysis

Borrowers are having to pay significantly higher mortgage arrangement fees than in the past, the Sunday Observer newspaper reports.

Until recently, mortgage arrangement fees, which are payable to the lender when you secure a mortgage, have been £200-£400, but lower level fees have become increasingly rare and very high fees have been creeping into the market, the newspaper reports.

Rob Clifford, of independent mortgage adviser Mortgageforce, said: "There is a definite move towards higher fees. Lenders are designing more of their mortgages to have very high upfront fees and low interest rates.

"Our concern about this is that some consumers do not look all that closely at fees and penalties that have an impact on the overall cost of mortgages."

Mr Clifford also says borrowers' decisions can be clouded further by offers from lenders to split larger arrangement fees so that customers pay a modest upfront fee with the rest added on to their mortgage, lessening the blow of a large cost.

Brokers claim rising fees are a result of lenders looking for ways to recoup the cost of implementing a new mortgage regulation framework, which comes into force from the end of this month.

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