Mortgage fees could hit £2,700 by 2016 if growth continues at its current rate according to new research.
Moneyfacts says ten years ago mortgage fees, which are the combined total cost of arrangement and exit fees, averaged £300 but today this figure has risen to in excess of £900.
This combined with rising stamp duty and potential interest rate rises means that mortgage fees are likely to hit £2,700 in ten years.
Moneyfacts says the launch of ING into the mortgage market with its no fees or low fee approach could see the market turned on its head and says it will be interesting to watch whether any other lenders follow in ING’s footsteps.
Moneyfacts mortgage analyst Julia Harris says: “Imagine having to pay £2,700 every two, three or five years. Your interest rate would have to be something pretty special to make this worthwhile.
“Let’s hope that fee growth doesn’t reach such levels, as this could make the mortgage market very stagnant, switching deals unworkable and dampening competition in the mortgage market. Whichever way you look at this, it will not benefit the consumer.
“Already the FSA is looking into the practice of exit fees, but if the recent reaction to fee capping by the credit card market is anything to do by, forcing down charges in one area will potentially result in increased costs to the consumer by other means.”