One in two younger mortgage borrowers think paying a broker fee gets them a better interest rate
A large proportion of mortgage borrowers seem to agree that brokers are entitled to charge fees, new independent research conducted on behalf of Boon Brokers has found.
Of the 1,000 mortgage borrowers across the UK questioned on the topic of mortgage broker fees in the industry, just over a tenth, or 11.8%, of borrowers stated that mortgage brokers should not charge fees to clients because they already receive a commission from the lender.
The results showed that the older the borrower, the more likely they are to take this view, with 20% of respondents over the age of 65 believing that brokers should not charge fees.
Younger borrowers, on the other hand, do not seem to mind paying broker fees, as long as they get better rates and service.
Almost half, or 49.4%, of mortgage borrowers aged 18 to 24 believe that they will access a better interest rate by paying the broker. Over a third, or 33.5%, of mortgage borrowers between the ages of 25 and 34 share this belief, while only 6.7% of mortgage borrowers over the age of 65 agree.
These statistics are worrying, according to Gerard Boon (pictured), managing director of Boon Brokers, a fee-free mortgage and equity release brokerage.
“Mortgage borrowers need to understand that there is no link between a brokerage’s fee structure and their product access,” Boon said. “A fee-free whole-of-market broker is likely to have the same product access as a whole-of-market broker that charges client fees.”
While almost a fifth of respondents, or 18.2%, are aware that fee-free mortgage brokers exist, they believe that they will receive a better service from mortgage brokers that charge a fee.
The younger the borrower, the more likely they are to believe that paying a broker fee will result in a better service, with 28.6% of mortgage borrowers between the ages of 18 and 24 sharing this view compared to just 3.3% of those over the age of 65.
“It’s concerning that young people believe that paying a mortgage broker fee will result in a better-quality service,” Boon added. “This is likely to be because they have less experience in the market compared to older borrowers. Younger borrowers may believe in the adage that ‘you get what you pay for’, even though there is no evidence to prove that this is the case in the mortgage broking industry.”
Meanwhile, 14.3% of mortgage borrowers questioned were unaware that some mortgage brokers do not charge a broker fee, while 8.6% of respondents confirmed that they would search for a reputable broker with lower broker fees than their current mortgage adviser when they require their service.
“With the cost-of-living crisis looming in the UK, mortgage borrowers need to understand that they do not need to pay mortgage broker fees to access broker services,” Boon stressed. “There are many reputable fee-free, whole-of-market, authorised firms in the market that borrowers can access.
“Not to diminish the work of brokers that charge client fees, as there are excellent firms in the market that charge, but mortgage borrowers need to understand their options in order to make an informed decision.”
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