Six of One…? Choice of Intermediary in the UK Mortgage Market

FCA Occasional Paper No. 35

43 Pages Posted: 18 Jun 2018

See all articles by Adiya Belgibayeva

Adiya Belgibayeva

Financial Conduct Authority; University of London - Birkbeck College

Tommaso Majer

Financial Conduct Authority

Date Written: May 4, 2018

Abstract

Using a novel transactional-level dataset we find that the average price of similar mortgage products for like-for-like consumers varies materially across UK mortgage intermediaries. We consider potential drivers of this price variation.

We find that, on average, intermediaries using a greater number of lenders sell cheaper mortgages. Conversely, intermediaries using fewer lenders sell more expensive mortgages on average.

We also investigate whether high commissions (called ‘procuration fees’) lenders pay to intermediaries are associated with intermediaries selling more expensive products. We find little evidence that intermediaries selling highly priced mortgages also receive high procuration fees.

Keywords: mortgages, household finance, intermediary, brokers, conflicts of interest

JEL Classification: D14, D83, G21, G24

Suggested Citation

Belgibayeva, Adiya and Majer, Tommaso, Six of One…? Choice of Intermediary in the UK Mortgage Market (May 4, 2018). FCA Occasional Paper No. 35. Available at SSRN: https://ssrn.com/abstract=3198197 or http://dx.doi.org/10.2139/ssrn.3198197

Adiya Belgibayeva

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

University of London - Birkbeck College

Malet Street
London, WC1E 7HX
United Kingdom

Tommaso Majer (Contact Author)

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

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