Six of One…? Choice of Intermediary in the UK Mortgage Market
FCA Occasional Paper No. 35
43 Pages Posted: 18 Jun 2018
Date Written: May 4, 2018
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: Suggested Citation