Mortgage set-up fees double in five years

19 November 2009 | By Nicola York, Christopher Jarvis

Research by Which? Money shows mortgage arrangement fees have nearly doubled over the past five years while valuation fees are overinflated.

The average arrangement fee for a two-year fixed rate mortgage at 75 per cent loan to value was £417 in 2004 and is now £802.

The research by Which? also shows that valuation fees range widely from lender to lender. It singles out Northern Rock as the worst culprit, as it charges £455 for a valuation on a £250,000 property, compared with £227 that Which? calculates a customer would pay on average to use their own surveyor.

Halifax and Lloyds TSB/Cheltenham & Gloucester were the second and third worst, charging £430 and £400 respectively for valuations.
Which? says: “The huge range of fees charged by different lenders suggests that this does not reflect a true fee for admin but is rather a random charge that lenders can inflate as much as they like.

“Neither the valuation fee nor additional admin fee is included in the headline mortgage rate, helping lenders to conceal the full cost of their mortgages.”

Quantum managing director Jonathan Burridge says: “Up-front fees have increased across the board. Ultimately, borrowers do not really have much choice because the market is controlled by a small number of providers.”

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