During the spring, the housing market increases in activity as more buyers enter the scene, influenced greatly by the improved weather, which enhances a property’s curb appeal. However, current buyers and those looking to remortgage face higher expenses compared to several years ago. Not only are average mortgage rates starting with a “5,” but borrowers also encounter substantial arrangement fees to secure the best rates. These fees are charged by lenders for securing a specific mortgage rate and are in addition to any conveyancing or broker fees.

Over the past five years, the average product fee on a fixed-rate mortgage has seen an increase of £81, now averaging at £1,121 according to Moneyfacts data. During this period, the number of deals available without fees has decreased from 41% to 36%, and there are fewer deals offering cashback incentives.

Borrowers considering refinancing a mortgage taken out at a cheaper rate in 2020 will find that “mortgage fees have gone up” warns Rachel Springall, a finance expert at Moneyfacts. “Outside of the low headline rates gained attention, borrowers must check the overall cost of any mortgage including any fees or cost-saving features.”

In addition to the product fee, other costs of buying a house must also be considered, such as valuation and legal fees. With numerous residential mortgage options on the market, potential buyers must navigate the market carefully, as many come with higher product fees.

Lenders often structure their deals with varying tiers, with each tier having a different rate and product fee. It’s crucial to calculate whether the savings on interest rate outweigh the product fees before making a decision.

Considering an average UK home price of approximately £270,000, and nearly £530,000 in London, the ideal deal greatly depends on individual circumstances. The decision often revolves around balancing between the interest rate and the product fee, with larger loans typically benefiting from the lower rate despite a higher fee.

Given the market conditions, where many homeowners will see the deals with fixed rates of 3% or below expiring this year, the current average two-year fixed rate sits at 5.33%. This represents a significant increase in borrowing costs for those who haven’t experienced higher rates yet.

By offering higher fee products, lenders are compelled to reduce rates further, catering to those with larger mortgages for whom a lower rate could offset the large initial fee. However, for many, focusing on minimizing fees might be a better strategy, even if it involves accepting a slightly higher rate.

Source: https://www.theguardian.com/money/2025/apr/05/uk-mortgages-warning-over-big-fees-as-homebuying-season-arrives