Number of fee-free mortgages see dramatic rise in 2016

Number of fee-free mortgages see dramatic rise in 2016

The latest report from Moneyfacts has revealed that the number of fee-free deals on fixed-rate products have increased by more than 100% over the year.

According to Moneyfacts, fee-free deals have risen from 556 a year ago to 1,162 in November. At the same time, the average fixed rate fee has increased from £954 to £984.

The total number of fixed-rate mortgages has seen slower growth, rising from 2,751 a year ago to 2,854 today.


Charlotte Nelson, Finance Expert at Moneyfacts, said: “It’s great news that the number of fixed rate deals without a fee has increased by a staggering 606 products. With more deals now than ever offering a no-fee option, it is clear to see that lenders are trying to compete in ways beyond just the headline rate.

At the same time, as the number of fixed rate deals with no fee has increased, the average fixed rate fee has increased too, rising from £954 to £984 over one year, giving the impression that products that charge a fee are disproportionately more expensive. This is mainly an attempt by providers to compensate some of their low rate deals with a higher fee, particularly as the average two-year fixed rate has fallen from 2.67% to 2.34% in the last 12 months.

Too many borrowers focus their attention on achieving the lowest rate possible and miss out on some of the deals that end up being the most cost-effective. For example, borrowers opting for the lowest two-year fixed rate deal at 75% loan-to-value would be £1,072 worse off compared to a borrower who opted for the lowest deal with no fee.

Fees can soon mount up, particularly if a borrower opts for a two-year deal and remortgages after the deal expires. This can make ignoring fee-free options a costly mistake, as the amount paid on the fee could instead be better spent overpaying the mortgage."

Join our mailing list:

Leave a comment



Our Next Event

Buy-to-Let Roadshow July 2017

Buy-to-Let Roadshow July 2017

Newcastle - 18/07/2017

Bolton - 19/07/2017

Derby - 20/07/2017

Reading - 21/07/2017

Register now

Latest Comments

SecomTech
SecomTech 22 Jun 2017

AT Last...This was discussed years ago and there was a move towards landlords registering their bad tenants on a database..(can't remember where) It seems a logical step though our leaders will probably...

view article
Bertrand
Bertrand 02 Jun 2017

How about the Welsh Govt introducing a scheme to protect landlords against "rogue" tenants who are then taken to court for criminal damage to the properties they trash. Pretty unlikely I suspect and politically...

view article
AmberMorris
AmberMorris 25 May 2017

"Please don't pick a novelty tune-playing doorbell. They're not 'fun'. They're stupid." Laughed a lot to this. It's actually true, though.

view article
Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

view article
Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

view article
Izzy
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

view article
paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

view article
CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

view article
warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

view article
Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

view article
Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

view article
MH
MH 13 Apr 2017

You are right that the bank holidays are going to be spoiled in looking for the properties. But people who want to sell their property and looking for the better relocation, they can get benefits of this...

view article

Related stories

More articles from Finance

Buy-to-Let Roadshow
July 2017

18th-21st July

4 days
7 specialists
4 locations
Free to attend

Click here to register now