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Lender defends brokers amid Bank of England report claiming bias toward short-term fixed rate products

ended 24. January 2025

The Bank of England published a report recently, which suggests that mortgage brokers might be steering borrowers toward two-year fixed-rate mortgages instead of longer-term options, such as five-year deals. This practice potentially allows brokers to earn commissions more frequently.

In response to that report, Mark Eaton, COO at longer-term lender April Mortgages has defended brokers while addressing broader issues in the UK mortgage market. Here's Mark's response:

“The dominance of short-term mortgage products in the UK market is a pressing issue that requires urgent attention.

“From my experience, the vast majority of brokers work tirelessly to secure the best possible mortgage products for their clients, considering a wide range of factors such as risk profile and individual needs.

“However, we must address the systemic issues within the UK mortgage market that drive this bias toward short-term products. Brokers are limited to the range of products available to them, which has historically been dominated by two- and five-year deals. 

"The core problem lies in the lack of innovation from lenders, who have failed to develop modern, longer-term products that balance the stability borrowers need with the flexibility they demand.

“To truly serve borrowers’ best interests and help them plan for the long term, lenders must step up by introducing more diverse, longer-term options with fairer early redemption penalties and a balanced fee structure. 

"This is a standard practice across much of Europe, where short-term mortgage products are far less common.

“Brokers also need to be fairly compensated for considering these modern, long-term alternatives. Offering the same commission for both short- and long-term products fails to incentivise brokers to give equal weight to longer-term fixed-rate solutions that can offer greater value and security to borrowers."

April Mortgages' response raises important points about the lack of longer-term options in the UK and the need for fairer compensation structures for brokers. 

Newspage asked brokers to give their perspectives on this stance. Their views can be found below.

3 responses from the Newspage community

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Editor
Rohit KohliVerified
Director at The Mortgage Stop
It’s refreshing to see a lender like April Mortgages not only call for innovation in the mortgage market but also stand up for brokers in the face of what many would consider a poorly constructed Bank of England report in the first place. Brokers are at the heart of helping borrowers navigate an often confusing and limited mortgage market. It’s unfair to suggest they’re steering clients towards short-term products for self-serving reasons, especially when the reality is that the market itself offers few viable alternatives. If the Bank of England and FCA are serious about addressing the over-reliance on short-term mortgages, the focus should be on creating regulatory frameworks that encourage lenders to develop innovative, long-term products. April Mortgages’ response sets a great example of how the conversation should shift towards practical solutions that support brokers and empower borrowers.
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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
If it was just brokers pushing clients towards short term fixed products, surely the direct to lender channels would have a much higher percentage of long term fixed mortgages. It is understandable at the moment, with many believing rates are likely to come down over the coming years, if only by smaller margins, that locking in a rate for 5 years at near peak interest rates may not be most cost effective, unless stability in the payments for a longer time were important. When we had the really low rates, virtually all our clients were put onto long term fixes as clients wanted to secure the low rates and be protected from interest rises.
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Iain SwattonVerified
Director at Exemplar Financial Services
The Bank of England’s report highlights a pressing issue: the UK mortgage market remains focused on short-term rates rather than meaningful product innovation. While brokers have been called out for favouring two-year fixes, this oversimplifies the real problem. The lack of creativity from lenders limits brokers’ ability to meet borrowers' evolving needs, especially as affordability challenges grow. Borrowers want stability and flexibility, but the market continues to prioritise short-term products over diverse, longer-term solutions. For real progress, lenders must introduce innovative options with fairer redemption penalties and balanced fees. Brokers also need fair compensation for promoting longer-term products, incentivising them to offer choices that align with borrowers’ long-term goals. It’s time for the industry to catch up with client needs. Collaboration between lenders and brokers is essential to deliver solutions that truly benefit borrowers today.