Borrowers “beware” real cost of mortgage deals

Homeowners thinking about finding a mortgage or remortgage deal should be aware of their “true cost”, Moneyfacts has said.

While several lenders have cut their rates in recent weeks, the personal finance provider has said other lenders have not made reductions to rates or fees.

Some mortgage lenders have also changed their fees from a monetary sum to a percentage fee and some have reduced rates but increased the fees they charge. Overall, the average fee has risen by almost £100.

Moneyfacts said “typically there is a sting in the tail” when lenders announce reductions. The average rate on a two-year fixed-rate deal is now 6.9 per cent, dropping from 7.08 per cent at its peak last month.

Consumers are urged to “not just look at the headline rate being offered” but find out the true cost of mortgages to avoid finding themselves with debt management problems.

In related news, today the Daily Telegraph said the days of cheap mortgages were over.

By Morwenna Kearns