Lender arrangement fees on 90 per cent loan to value mortgages have sky-rocketed 62 per cent over the last year and 32 per cent in the last month.
Moneyfacts data, compiled for Money Marketing, shows the average fee on fixed and variable 90 per cent LTV deals was £1,301 in the first week of April, compared to just £805 at the same time last year. In the first week of March, the average fee stood at £970.
Across all mortgages, average lender fees hit a 25-year high of £1,522 in the first week of April, but remained steady over the year risingonly slightly from an average of £1,502 in April 2012.
Moneyfacts statistics show the funding for lending scheme has caused significant falls in the rates of two and five-year fixed rate deals, accompanied by hikes in arrangement fees during 2013.
Moneyfacts financial expert Rachel Springall says: “Of all the fixed mortgage deals available requiring a 10 per cent deposit, only around a quarter of these are fee free.
“First-time buyers are more likely to look at this area of the market, where a decent incentive package is likely to be attractive to them and the lower the upfront costs the better.
“It is possible that higher fees are becoming more common to sustain the overall package.”
Your Mortgage Decisions director Dominik Lipnicki warns expensive fees can quickly add up as they are often rolled into the mortgage.
He says: “We have seen a massive increase in fees over the last few years and particularly in the last few months.
“It is a great marketing ploy for lenders because clients are used to looking for the cheapest interest rates but they need to look at fees as well. It shows why they are better going through an advised process and not direct.”