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Brokers respond to Property Industry Eye article

ended 07. August 2023

Free UK newswire, Newspage, sought reaction from brokers following the publication of a story on Property Industry Eye this morning stating: “Apparently, the revenue derived by broker firms and advisers amounted to £1.58 billion in 2022. This was up 12% over the previous year. That’s quite a chunk of money being extracted – sorry, earned – out of the pockets of borrowers.” Their views can be found below.

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9 responses from the Newspage community

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James Bull
Mortgage Broker at JB Mortgages
To say mortgage broker income is "extracted" from borrowers' pockets is highly misleading. Firstly, a large part of mortgage broker income will be procuration fees paid by lenders and providers, so this is not directly paid by borrowers in any case. Granted, most mortgage brokers charge fees for their professional services, but these fees represent excellent value for money and, in many cases, clients would not be borrowers at all without a mortgage broker to recommend them the right mortgage for their circumstances.
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Jonathan Southgate
Founder at Sterling Southgate
This is a prime example of unfettered clickbait by an anonymous reporter at a time when most of the industry is behind our beleaguered advisers. Lenders see our advising community as a value-add whilst they are busy closing branches. This article smacks of a pubescent teenager having a rant because mum has suggested a little less screen time.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
What an absolute non-story. Revenue for broker firms has increased for many reasons. Firstly more borrowers are now seeking professional advice than ever before, leading to savings for many borrowers, and because, in more complex market conditions, financial advice is priceless. Additionally, as house prices have increased, so have typical mortgage sizes and that ties in with the commission paid by lenders.
It is clear to see from the stat's quoted, that the majority of the revenue is from Bank's pockets, and doesn't affect the amount paid by the borrower at all. I presume this story is proposed by someone in the banks trying to deflect attention from the record profits banks are making whilst being unable to give any notice on rate increases and being slow at passing on rate increases to savers. The 12% rise in revenue has largely been offset by increased business costs and staff wage increases, so an increase in revenue is not often resulting in additional profit.
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Bob Singh
Founder at Chess Mortgages
'Extracting' seems to imply brokers somehow force clients to pay fees, which is clearly not the case. Fees are not only fair and agreed up-front but often payable after the work has been done, a bit like estate agents. Broker revenue is higher for a few reasons: firstly, the market has been good over the past 2/3 years; secondly, borrowers want advice and are willing to pay for it; third, loan sizes are higher; fourth, the brokers that don’t charge fees are beginning to value their time and expertise. And fifth, brokers are using social media better to exhibit their market knowledge. Many don’t realise just how hard self-employed advisers works to earn their fees often working to tight deadlines in a highly regulated environment 7 days a week. Let’s hope the non-fee charging brokers start charging and hike the figures even further giving this publication some more material for their next journalistic masterpiece.

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Imran Hussain
Director at Harmony Financial Services
Massively misleading and disappointing article from a trade property publication. Money is never extracted from a client's pocket, it's paid by lenders as it's cheaper for us to provide advice compared to a bank/lender doing it themselves. Brokerages provide excellent value in comparison to clients having to wait weeks on end for an appointment at their local bank branch if it they are lucky enough to still have one.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
It's disappointing that a property publication would make the accusation that brokers aren't working hard to earn that revenue and provide value to clients, as well as helping estate agents and conveyancers in the chain at the same time. It is also worth pointing out that a large part of that revenue is in the form of procuration fees from lenders, and removing the broker from the transaction sees that money remain with the lender to cover the increased costs of advising on and marketing their mortgages, which is the work done by brokers currently. It would not translate to lower cost mortgages for borrowers but may go towards even greater profits for banks.
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Rob Gill
Managing Director at Altura Mortgage Finance
The figures from the FCA show that the total commission from mortgage activity was £868m with a further £267m coming from client fees. The services provided supported gross mortgage lending of £322bn, and aggregate profits for UK banks of £41bn. In this context, mortgage brokers surely provide excellent value for lenders and borrowers alike.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It is publications of this kind that tend to create a rift between brokers and their clients. In our capacity as brokers, we extend a service to our clients and, as such, it is reasonable to levy a fee for the provision of that service. Our qualifications have been diligently acquired, plus the FCA compliance requirements, rendering us authorities and experts in our field. Consequently, charging a fee to facilitate perhaps the most significant transaction in a client's life is both equitable and valid. The client is not only gaining access to an expert, but is also securing a mortgage that is optimally tailored to their circumstances, and likely from a lender that they cannot directly engage with. Financial advisers similarly impose charges for their erudite counsel, therefore condemning mortgage brokers exclusively for their fee structure is deeply unwarranted.
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Steven Morris
Advising Director at Advantage Financial Solutions
In other news, modern scholars discover the earth is round. A fee charging specialist broker has just as much right to accuse a fee-free broker of lacking expertise, as a fee-free broker has the right to accuse a specialist broker of over-charging. Let's not mince our words here, fee-free firms, particularly the larger online ones don't do anything even remotely specialist. Phone one of these firms as an ex-pat, or someone in their 70's or 80's and ask them to help you with a mortgage. You will be ignored and ushered out of the door quicker than you can say the words 'sausage factory'. So yes, certain brokers charge. Some do so, just because they feel they can get away with it, however most charge because they are spending extra time, helping the clients that the fee-free brokers, wait for it... can't afford to help due to not being paid a fee.