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."

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Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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