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The effect of mortgage brokers on banks’ business models

Author

Listed:
  • Buckmann, Marcus

    (Bank of England)

  • Eccles, Buckmann

    (Bank of England)

Abstract

We study the effects intermediaries have on the UK mortgage market by exploiting the strong increase in broker intermediation between 2013 and 2020. Our findings indicate that this rise coincided with more households choosing mortgages with a short fixed term, due to brokers steering households towards these mortgages to increase fees from repeat business. Increased broker intermediation also enabled smaller lenders to reach more customers by geographically diversifying their mortgage portfolios, which gave smaller lenders the opportunity to specialise their mortgage portfolios, concentrating on long fixed-term and high LTV mortgages.

Suggested Citation

  • Buckmann, Marcus & Eccles, Buckmann, 2025. "The effect of mortgage brokers on banks’ business models," Bank of England working papers 1104, Bank of England.
    • Handle: RePEc:boe:boeewp:1104
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2024/the-effect-of-mortgage-brokers-on-banks-business-models.pdf
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    More about this item

    Keywords

    Mortgages; brokers; banks; household finances; portfolio diversification.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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