The one-off charges have been hiked, as lenders look to their profit margins, it has been suggested.
Arrangement fees have been hiked sharply by large British mortgage lenders over the past year - despite there being no discernible difference in services rendered.
New analysis from data firm Defaqto suggests that the one-off charges are being boosted in order to maintain lenders' profit margins, rather than due to increasing costs. According to a report by The Times the fees have been raised by up to 183 percent over the past year.
Britain's mortgage lenders have been hit hard by the credit crunch in recent months, which has led to a downturn in house prices and a tapering-off of consumer interest in buying homes. The global wholesale money markets, on which banks lend to each other, have also been negatively affected by the crisis - with financial firms becoming much warier about extending credit as a whole.
Therefore, many lenders are thought to be looking for other ways of boosting revenue - explaining the rises in arrangement fees. The firms are thought by Defaqto to have earned an extra £3 million last month, thanks to the increased prices.
The arrangement fee rises have also served to cancel out much of the initial benefit customers have gained from recent headline repayment rate cuts. Firms including HBOS, HSBC, Abbey and Nationwide have all recently administered such reductions over the last few weeks, as lending conditions on the wholesale markets have eased.
"Lenders are able to use arrangement fees as a hidden way of boosting the overall cost of the mortgage," said David Black of Defaqto. "It's worrying that some of the lenders taking the most business have introduced the biggest fee increases."
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