"The FCA’s new Consumer Duty regulation should ensure that all borrowers are treated fairly regarding fees."
Almost half (49.4%) of mortgage borrowers between the age of 18 and 24 believe that they will have access to a better interest rate if they pay a broker fee, research from Boon Brokers found.
The figures show that just over a third (33.5%) of mortgage borrowers between the ages of 25 and 34 share this belief. The older the borrower, the less likely they are to take this view, as just 6.7% of mortgage borrowers over the age of 65 agreed.
The data differs significantly when filtered by the city of the respondent. In England, Manchester has the highest percentage of respondents sharing this view at 46.3%. This falls to 34.4.% in Bristol, 34.2% in London, 31.4% in Nottingham, 25% in Leeds and 25% in Norwich.
Almost a fifth of respondents (18.2%) are aware that fee-free mortgage brokers exist but believe 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. At the extreme ends of the data, this view is shared by 28.6% of mortgage borrowers between ages 18 and 24 compared to just 3.3% of those over the age of 65.
In addition, over a tenth (14.3%) of mortgage borrowers questioned were unaware that some mortgage brokers do not charge a broker fee.
Due to the cost-of-living crisis, 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. This plan of action is especially prominent for younger borrowers between the age of 18-24 (15.6%) and 25-34 (13.5%) compared to older age groups. Only 4.4% and 6.2% of respondents between the age of 35-44 and 45-54, respectively, confirmed that they will search for a cheaper mortgage broker due to the cost of living crisis. This indicates that older borrowers are more loyal to their existing mortgage broker than younger borrowers, even if they could switch to a cheaper alternative.
Boon Brokers also found that there was a difference in the level of broker fees charged to each age group. Young borrowers between the age of 18-24 represented the largest age category of borrowers that were charged a client fee of £1,000 or more in the past – at 10.4%. This statistic fell sharply for other age groups.
Gerard Boon, managing director of Boon Brokers, commented: "Mortgage borrowers need to understand that there is no link between a brokerage’s fee structure and their product access. 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.
“It is also worrying that young borrowers between the age of 18-24 represent the highest portion of borrowers paying broker fees of £1,000 or more. The FCA’s new Consumer Duty regulation should ensure that all borrowers are treated fairly regarding fees. Hopefully these statistics become more evenly distributed among the age groups in the future.”
