Three-quarters of mortgage deals on the market now offer “sweeteners” such as cashback or free legal fees, as competition to attract borrowers heats up further.
Financial information website Moneyfacts.co.uk said it has seen a sharp rise in these added perks, with 75% of the mortgage market now offering borrowers some form of incentive, up from 62% a year ago.
Such offers are another way for mortgage lenders to stand out from the crowd, in the midst of the “rate-cutting frenzy” that has already taken place in recent months, Moneyfacts said.
Many lenders have already cut their mortgage rates to the lowest they have ever offered in recent months.
There are now 2,818 deals on the market which offer incentives such as cashback and concessions on legal fees and valuation fees, Moneyfacts said.
The number of deals offering cashback has nearly tripled over the last five years, from 345 deals five years ago to 890 now, according to Moneyfacts’ figures.
Charlotte Nelson, a finance expert at Moneyfacts.co.uk, said: “Providers are finding it increasingly difficult to stand out from the crowd to attract new customers thanks to the rate-cutting frenzy that has gripped the mortgage sector. The incentive package is therefore is great way to distinguish themselves from other lenders.
“Buying or re-mortgaging a home can be expensive, particularly for borrowers who have used the majority of their savings to put down a deposit, so incentives such as free legal fees, free valuation or even cashback can be really attractive. With so many more deals on the market to choose from, savvy borrowers will definitely be able to turn the situation to their advantage and minimise some of their up-front costs.”
Ms Nelson said mortgage borrowers should weigh up the deal as a whole to work out whether it is good value, and not just be swayed by perks.