The average mortgage fee has risen to more than £1,000 for the first time since August 2013 despite lenders cutting rates to stay competitive after the recent interest rate rise.
According to data published by Moneyfacts, the average mortgage fee sits at £1,005 compared with £997 and £967 in the previous two years.
Since the Bank of England’s base rate rise in August, the average fee has increased by £15 to reach its highest level in five years.
Charlotte Nelson, finance expert at Moneyfacts, said the increase was a direct response to lenders cutting their rates to remain competitive after the rate rise and looking to compensate these deals.
She said: "Providers are currently fighting among themselves to be seen as the lender offering the lowest rate on the market, all in a bid to attract borrowers who are considering remortgaging after the recent rate rise by the Bank of England.
"Mortgage rates are still far lower than providers’ costs, for example the average two-year fixed rate only stands 0.16 per cent higher than it did in November 2017, increasing from 2.33 per cent to 2.49 per cent.
"By increasing fees, providers are making a small attempt to recoup some of this extra cost."
Ms Nelson said while low-rate deals looked great on paper, a hefty fee could mean what appears cheap may in reality be much costlier.
She said: "For example, based on the lowest rates available at 60 per cent loan-to-value, opting for the lowest rate mortgage without a fee would make a borrower £577.02 better off than opting for the cheapest rate in the market alone."
Ms Nelson said it is important borrowers note fees can vary in impact depending on how much is borrowed, with a low rate and high fee scenario ideal for those looking to purchase properties at the higher end of the market.