UK Mortgage Rates Sink to Record Lows but Fees Soar

on Aug 12, 2013
Listen

iNVEZZ.com Monday, August 12th: British borrowers should beware of sky-high fees attached to low-rate mortgage lending deals, as the war for the top spot in the best-buy tables gathers pace, bringing new products to the UK mortgage market, experts have warned.

Mortgage rates have fallen to historically low levels as a result of the government’ Funding for Lending scheme, which provides cheap finance to banks and building societies which increase their mortgage lending. But with the recent cuts in rates, the fees attached to the best-buy deals have soared, reaching levels last seen at the height of the UK housing market boom in 2007.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

According to Moneyfacts.co.uk, currently the average mortgage lending fee across all fixed- and variable-rate deals is £1,545, an increase of £135 since January and the highest recorded in 25 years. “Low rates are often compensated by high fees, so these should never be overlooked. A mortgage deal should not be taken out by rate alone, as it is the overall cost and package that counts,” Moneyfacts’s finance expert Rachel Springall warned, as quoted by The Guardian yesterday.

**West Brom Joins Mortgage Rate War, Beating HSBC’s Market-Leading Deal**
West Bromwich Building Society has joined the fixed-rate mortgage price war, releasing the latest mortgage product and pushing rival HSBC off the top of the tables.
West Brom has cut its existing rates on its range of fixed mortgages by up to 0.061 percent, with its two-year fixed rate dropping from 2.09 percent to 1.48 percent. This just undercuts the 1.49-percent offer from HSBC — the first lender to reduce its mortgage rates below 1.5 percent. Yet, West Brom’s new “lowest-ever” mortgage rate comes with a £99 booking fee and £2,395 completion charge, or a total extra cost of £2,494, while HSBC is charging £1,999.

David Hollingworth of London & Country Mortgages was quoted by The Telegraph as saying: “The deal from West Bromwich shows that it’s not just the big boys that are aiming to attract borrowers in with exceptionally low rates.” According to Hollingworth, however, only those borrowers with bigger mortgages of around £250,000 to £300,000 would find it worthwhile paying such high fees to get the lowest rates.

!m[HSBC’s Fixed Mortgage Rate Undercut by West Bromwich but Both Come with High Fees](/uploads/story/4750/thumbs/pic-1_inline.jpg)
Commenting on the customers’ options, James Wright, West Brom’s Divisional Director for Marketing and E-Commerce, yesterday said in a statement: “Those looking to minimise their monthly repayments can opt for a deal with a particularly low rate of interest, while others who want to reduce upfront costs can consider a mortgage with an incentive such as a free valuation.”

Ad

Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
UK Europe Real Estate Residential Real Estate World