Occasional Paper No. 35: Six of One…? Choice of intermediary in the UK mortgage market

As part of the mortgages market study, the FCA wanted to understand whether consumers’ borrowing costs vary materially depending on their choice of intermediary and, if so, why. 

Occasional Paper No. 35 (PDF)


We know that a consumer’s cost of borrowing can differ as a result of product, property and borrower characteristics, including credit risk. To isolate the impact of the choice of intermediary, we use a novel transactional-level dataset to build a model for mortgage pricing to compare similar products for like-for-like consumers.

We find that the average cost of borrowing varies materially across intermediaries. Looking at the cost of 2-year fixed rate mortgages sold by different intermediaries to like-for-like consumers, we find a 27 basis points difference in the average borrowing cost. This amounts to about an £800 difference calculated on the median loan size over the introductory period.

In investigating why the cost of borrowing varies across intermediaries we consider two potential drivers. The first is the commission lenders pay to intermediaries (‘procuration fees’). The second is the number of lenders each intermediary used to place business. 

We find that:

  • current levels of commission do not appear to be linked with customers paying more for a mortgage
  • intermediaries that place business with a larger number of lenders sell on average cheaper products, while those that use fewer lenders sell on average more expensive products


Adiya Belgibayeva and Tommaso Majer

Adiya Belgibayeva and Tommaso Majer work in the Competition & Economics Division of the Financial Conduct Authority. Adiya Belgibayeva is also at Birkbeck College, University of London.


Occasional Papers contribute to the work of the FCA by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence that the FCA may use while discharging its functions and to inform its views. The FCA endeavours to ensure that research outputs are correct, through checks including independent referee reports. However, the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that Occasional Papers contain any errors or omissions, they should be attributed to the individual authors, rather than to the FCA.

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28/01/2021: Information changed Link removed from summary.