Mortgage broker fees have increased by more than 28% over the past year, with the average charge reaching £643, according to research by Boon Brokers.
The survey found that 56% of homebuyers paid between £500 and £700 to arrange their mortgage, with £500 remaining the most common single fee charged.
Fee structures and payment timing
Fixed fees were the most popular arrangement structure, accounting for 44% of cases. Percentage-based charges made up the remainder, with 29% calculated on the loan amount and 19% on property value.
The majority of brokers (85%) now charge fees after the full mortgage application has been submitted, representing a shift towards later-stage payment collection in the mortgage process.
Regional variations were evident, with lower fees more commonly found in Northern England, Wales and Northern Ireland compared to other areas.
The research also indicated that many potential purchasers were unaware that some brokers operate without charging fees, or held the belief that fee-charging brokers provided access to a wider range of lenders.
Broader mortgage market trends
The findings come as Bank of England statistics show mortgage approvals for house purchases fell to 60,000 in January, below the previous six-month average of 64,100.
Net mortgage borrowing by individuals decreased to £4.1 billion in January from £4.5 billion in December, also falling below the six-month average of £4.5 billion.
The effective interest rate on newly drawn mortgages decreased slightly to 4.09% in January from 4.15% in December.
The data suggests that rising broker fees are occurring against a backdrop of reduced mortgage activity and marginal improvements in borrowing costs for homebuyers.
