Mortgage application fees up 60%

Application fees on the UK's best buy mortgages have increased by nearly 60 per cent during the credit crunch.

According to the latest figures from mform.co.uk, the average fee for a best-buy three-year fixed-rate deal increased between August 2007 and July this year from £590.40 to £938 – an increase of 58.8 per cent.

Across the market as a whole the change was only marginally less dramatic.

The mform research reveals of the best-buy mortgages reviewed in August 2007 the average application fee was £738.33, but this had risen to £889.69 by July 2008.

This represents an increase of over 20 per cent.

"With the current challenges facing the mortgage market, it is not surprising to see that fees have risen by so much," said Francis Ghiloni, mform, marketing and business development director.

"This means that it has never been more important to look at the true cost of your mortgage, taking into account the interest rate but also any fees and charges that you have to pay."

However, in contrast to rising fees, there could be evidence the cost of borrowing could be beginning to fall.

Further research, released earlier this week by MoneyFacts.co.uk, finds the average cost of fixed-rate borrowing has now fallen back under seven per cent.

With prices peaking at 7.08 per cent earlier this month, the highest level for over a decade, the news the average cost has now fallen back to 6.96 per cent will provide some small respite for borrowers.

Chris O'Toole