Now it will cost £5,000 to take out your next mortgage

A devastating report released yesterday shows that the average cost has almost doubled in a year, while the interest rates charged by banks have also gone up.

Separate Government figures reveal that house prices are falling at their fastest rate since records began.

And in further bad news, the Bank of England has warned it may be forced to intervene in the market after it was told a raft of smaller lenders could soon close their doors to new borrowers.

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This would leave first-time buyers borrowing only from larger providers.

The BoE is understood to be working on a plan to take mortgage loans off lender balance sheets, according to The Financial Times.

Gordon Brown also indicated in yesterday's Downing Street talks with bank bosses that he was willing to intervene if, in return, lenders offer loans to first-time buyers and those struggling to find mortgage offers.

The fall in house prices in February was 1.6 per cent, the biggest monthly reverse recorded on the Department for Communities house price index.

Flats are losing value more quickly than any other type of property and suffered a 2.9 per cent decline in the month.

This was blamed on dwindling demand for new-build, city centre flats.

The average house price dropped by £3,541 to £217,737 and experts warned worse was to come.

Henry Pryor, founder of the property website Primemove.com, said average prices were falling about £1,000 a week.

He said the market was in a far worse state than had been suggested by even the bleakest reports published over the past fortnight.

Mr Pryor warned: "We must expect this to get worse before it gets better."

The report into the cost of arrangement fees was drawn up by mortgage advice firm Mform.

It found that the average charge for the most competitive three-year fixed-rate deal last March was £578.

Yet yesterday it cost £1,132, a rise of 96 per cent.

Those after a two-year deal have seen their charges rise from £999 to £1,478.

Mform compared the five best two-year and three-year fixed rate deals in March last year and compared them with the fees for the current top five.

Francis Ghiloni, business development director of Mform, warned against taking the lowest interest rate without checking the fee.

"After all the panic of recent weeks in the mortgage market, people may be tempted to grab the best deal they can and focus on rates to the exclusion of everything else," he said.

"They could be in for a nasty shock when it comes to the fee which is charged as they have rocketed in the past year."

HSBC charges up to £5,000 for its "Rate Matcher" deal, which lets homeowners whose current fixedrate deal is about to expire get the same rate with HSBC for another two years.

The interest rate on a typical twoyear fix has risen from 6.47 per cent in November to 6.64 per cent now, according to the Bank of England.

The mortgage meltdown continued yesterday with the number of deals available falling to just over 4,000 from 15,599 last summer.

Scarborough Building Society yesterday axed the 50 mortgage products it sells through brokers.

It blamed the "unprecedented volatility" in the market for the decision to withdraw the deals until next Monday.

Last week the Bank of England cut rates by a quarter point to 5 per cent but only a handful of lenders has followed suit.

Northern Rock's variable rate stands at 7.59 per cent.

It is standing firm despite the Prime Minister urging banks to pass rate cuts on to borrowers.

Chelsea Building Society has raised the minimum deposit which it requires from borrowers from 5 per cent to 10 per cent.

Brigid O'Leary, from the consultancy Capital Economics, said: "In light of recent data and events, there is little reason to be optimistic about the housing market.

"Tighter lending criteria and an uncertain economic outlook will continue to weigh heavily on buyer confidence."

The biggest lender will hit homeowners with a second-increase in mortgage rates in nine days.

Halifax's two increases will add more than £1,000 a year to a typical £158,100 home loan.

From today, some of the bank's most popular deals, such as a two-year fix and a number of trackers, will jump by 0.5 percentage points.

Halifax, which controls 20 per cent of the mortgage market, first raised its rates last Monday.

A spokesman said: "We price in line with the market.

"Wholesale money is much more expensive so home loans are dearer."

Alliance & Leicester raised its rates twice last week, adding 0.75 percentage points.