Desperate mortgage borrowers anxious to lock into attractive fixed rates could find that they are paying over the odds for their loans because they are failing to factor in sky-high arrangement fees.

More than 200,000 people will be coming off fixed-rate mortgages before the end of the year. Over the past 14 months, since they signed up to the loans that are about to end, there have been five interest rate rises, increasing the cost of borrowing by more than 25%. At the same time, disposable family income has fallen, as increases in council tax, fuel costs and public transport fares have started to bite.

To make matters worse, many mortgage lenders have cut back the deals they have on offer in the wake of the worldwide credit crunch set off by the US mortgage crisis. According to financial data provider Moneyfacts, the number of mortgages on offer has fallen by 40% in the past three months. Northern Rock alone has axed two-thirds of its mortgage range.

The worst-hit sector has been the one that caters for those with a poor credit history, with 54% of so-called 'subprime' residential mortgages being withdrawn. As lenders try to rein in their exposure to risk, the maximum percentage of the propertys value the loan-to-value (LTV) they are prepared to advance has also in many cases fallen.