Occasional Paper No. 55: Better the lender you know? Limited attention and lender familiarity in UK mortgage choices

This Occasional Paper looks at the effect of brand loyalty when borrowers are choosing new mortgages. 

Occasional Paper No. 55 (PDF)


Our Strategic Review of Retail Banking Business Models found that over 30% of UK customers with a personal current account (PCA) had their mortgage with the lender that provides their PCA.

This Occasional Paper (OP) investigates in more detail how lenders’ brands and existing relationships with consumers affect choices in the mortgage market, using uniquely granular data on the behaviour of UK first-time buyers and home movers who do not use a mortgage intermediary.

It identifies 2 drivers of brand loyalty within this subset of borrowers:

  1. Consumers (especially those with lower incomes, worse credit histories and lower educational attainment) are much less likely to consider mortgages from ‘unfamiliar’ lenders than from their PCA providers.
  2. When choosing among the alternatives that they do consider, consumers tend to show a strong preference for mortgages from their PCA providers over mortgages from other lenders under consideration. 

These effects are very strong. Even in a hypothetical scenario where all borrowers in the sample considered all the alternatives available to them before choosing a mortgage, nearly half would still go to the lender with whom they have a PCA.

This OP focuses on new lending rather than remortgaging and excludes intermediated transactions. But it echoes findings from FCA’s consumer research about the importance of the existing relationship with the lender to inactive consumers.


Zanna Iscenko


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, but 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.