The average mortgage broker fee paid by clients has stayed at £500 since the introduction of Consumer Duty rules, research from an adviser found.
A survey of residential homeowners carried out by TLF Research on behalf of Boon Brokers found that, when rounded to the nearest hundred, 13.6% of respondents said they were charged £500 for a mortgage broker’s services.
This was the most common option and similar to guidance from the government’s Money Helper Service before Consumer Duty was introduced, which suggested the average broker fee was £500.
Boon Brokers’ research found the next most commonly paid fee was £200, charged to 13% of respondents. Just over a tenth of people were charged £1,000.
The firm said this showed Consumer Duty had a positive impact, as the requirement for brokers to justify their charging model meant fewer were charging more than £1,000.
For 39% of respondents, this was a flat fee, while 37% paid a broker fee based on the percentage of the loan sum.
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Some 11% paid the full fee at the start of the advice process and nearly a tenth completed the payment once the property was purchased.
Just 3.7% paid in instalments.
The fairness of brokers charging fees and getting commissions
Clients were also asked for their views on how fees should be charged, and a third agreed that it was fair to base this on a percentage of the loan sum, meaning two-thirds felt otherwise.
Boon Brokers said it was unsurprising that so many believed it was not fair to base the broker fee on a proportion of the loan sum, as this was “not correlated with a broker’s efforts in processing a case”. The firm added that “charging on this basis seems unjust”.
Nearly a quarter – 24% – said it was fair for brokers to charge a fee even though they received a commission from the lender.
Some 19% said the fee they paid was justified, while 12.5% felt it was not, as a fee-free broker would have been able to access the same mortgage options.
Some respondents did not know that a fee-charging broker received a commission, cited by 9.7% of people, and 6.3% were not aware that fee-free brokers existed with access to the same mortgages.
The study comprised 352 homeowners in Cardiff, Manchester, London, Sheffield, Belfast, Liverpool, Newcastle, Glasgow, Bristol, Birmingham, Southampton, Nottingham, Edinburgh and Leeds who had either purchased or refinanced their property since July 2023, after Consumer Duty was brought in.
