Average mortgage arrangement fees have nearly doubled in the last five years to more than £1,500, research has revealed.
Typical fees have risen from £878 in 2009 to £1,588 this year, according to a new report from consumer rights organisation Which?.
The group also revealed that mortgage lenders enforce more than 40 fees and charges across the market. These include arrangement fees, set-up fees, arrears fees and final repayment fees.
The research also exposed significant variation between lenders in the cost of the same fees. This, it suggests, means fees don't always reflect the true cost the lender incurs.
A search for 80% loan-to-value mortgages available for remortgaging a £200,000 home at Moneywise.co.uk/compare highlights the massive difference in booking fees between lenders.
For example, Norwich & Peterborough Building Society has a two-year fixed-rate deal at 2.29% that comes with an application fee of £1,295. Cambridge Building Society's version (which has the same rate) charges £699 – that's a difference of 85%.
Which? also found that some lenders are using different names for the same or similar fees. For instance, a booking fee can also be called a reservation or application fee. This can make things confusing for customers.
In addition, Which? said a lack of clarity about fees generally makes it difficult for borrowers to tell if the fees are avoidable and leads to them paying over the odds.
"This vast array of confusing fees and charges, which aren't always reflected in the standard APR (Annual Percentage Rate), means the total cost is not clear to borrowers, leaving them unable to easily find the best deal," said a Which? spokesperson.
"We found just 3% of people could correctly rank the cost of five two-year fixed-rate mortgage deals when displayed using typical information, including APR. This rose to 36% when presenting the total cost of the mortgages over 24 months," the spokesperson added.
The research showed that consumers borrowing £100,000 over two years could save up to £1,503 "if they took into account the set up fees rather than choosing the product with the lowest interest rate".
The consumer group's executive director, Richard Lloyd, added: "The Chancellor must act now to stop sneaky fees and charges and end mortgage confusion for consumers. The government and the regulator should also explore better ways of presenting the total cost of mortgages."