We're not the only mortgage commentators to feel that the rapid growth of product fees has created an unwanted norm for applicants.
Nowadays, mortgage applicants are almost universally faced with a bill in the region of £1,000 for switching their mortgage. What's more objectionable is how swiftly they've increased. In 2006, the average mortgage product fees totalled £514; in just two years, that average almost doubled to £944. For a bit more context, consider that back in 1992 the average fee was just £98 - and there was a lot more work involved in the application process in those pre-internet days.
It seems clear that lenders have collectively jumped on the fee bandwagon so that they can gather their profits sooner on the mortgage deals they issue. An attempt by Alastair Darling to threaten lenders with FSA action on fees was predictably ineffective. The only thing that can reign in this proliferation of fees is a healthy dose of market competition, and so far that's been absent.
But is that finally about to change?
Firstly, fees are coming down for the first time in ages. According to Moneyfacts, the size of the average fee charged on deals in the last six months took a dip from £944 to £925.
Secondly, a flurry of reasonable fee-free deals are on their way. It seems that major lenders are realising that many customers resent jacking up their loan by £1,000 or more just for applying, and they're finally competing to tempt those customers.
A&L, Britannia and Northern Rock have all introduced fee-free mortgages with a relatively modest 0.5% margin over their equivalent fee-bearing deals.
The Alliance & Leicester four-year fixed rate mortgage, for example, will charge 5.09% with a £995 fee, and 5.59% without.Britannia has fee-free fixes for both five and ten years, at 5.59 and 5.69% respectively, which are set no more than 0.5% above the rates it offers for people paying £999 application fees.Northern Rock's premium for a no-fee deal also comes in at under 0.5% on most loan-to-value scenarios.
However, not every borrower can benefit. Arguably, the borrowers most in need of fee fee deals - those without a large amount of cash set aside - are the least able to find them. Big deposits of 25-30 per cent are required for most of the above options.
It's also noticeable that this competition is so far confined to fixed-rate deals, which have higher interest payments to begin with than trackers at the moment. HSBC is one of the few banks to offer a fee-free option on its tracker mortgages. Again though, you have to be a first-time buyer with a 25% deposit to get one. How many of those are there?
Conclusion: it's great that there's some competitive activity on fee-free deals, as it might start to challenge the hegemony of four-figure fees. But lenders will have to go a bit further if they're going to provide options for the majority of applicants.