propertytalk Live! - Mortgage pricing structures create minefield

propertytalk Live! - Mortgage pricing structures create minefield

The price of arranging a mortgage has risen over the last 18 months, making it harder for consumers to gauge the total costs involved when applying for a loan.

Analysis from moneysupermarket.com shows the average application fee has risen by £97 since September 2009, an increase of 14% for fixed products and £118 for tracker products (up 15%).

Traditionally, lenders charged a fee to cover the administration costs associated with providing a mortgage, however, in recent years many lenders have been increasing application and booking fees to offer lower headline rates while maintaining margins.

These fees can either be charged as a fixed amount or as a percentage of the mortgage amount, sometimes up to 3.5% of the loan size, so it's important for consumers to understand how this will impact the total cost of the mortgage before applying.

The analysis also shows a rise in booking fees which allow consumers to reserve a mortgage rate offer when their application is agreed upon in principle. The average fee for fixed products has gone up £9 over the past 18 months and £7 for tracker products over the same period.