A recent Bank of England study into the mortgage market put brokers firmly under the microscope, suggesting they’re steering borrowers toward two-year fixed rate products.
In my opinion, of course they are – the data doesn’t lie – but the real issue that wasn’t addressed isn’t brokers chasing commissions, as the report concluded, but lenders not offering viable longer-term alternatives.
The reality is that brokers work within a system that gives them little choice. The market is dominated by two- and five-year deals. Longer-term options are rare and often come with restrictive terms, high fees, or steep early repayment charges that make them unworkable. Brokers can only advise on what lenders offer, and what they offer usually begins with a five or a two.
While most brokers work tirelessly to secure the best products for clients, their advice is limited by the options available.
Future uncertainty
Short-term fixes might seem appealing, but they create long-term instability, forcing borrowers to refinance every few years – bringing uncertainty, potentially extra fees, and higher costs. We’re already seeing the impact, with borrowers coming off ultra-low fixed rates facing significantly higher repayments.
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It’s an unnecessary cycle of financial stress and yet, given the UK mortgage market’s structure, it’s often the only option.
In large parts of Europe – including the Netherlands, where our parent company is thriving – borrowers have access to longer-term fixed rate mortgages with far greater flexibility. Dutch homeowners commonly fix rates for 20 or 30 years, allowing them to plan with confidence and take on larger loan to values (LTVs) and loan sizes. Unlike in the UK, where short-term fixes push borrowers into constant refinancing, the Dutch system provides stability without rigid agreements.
A key difference is that Dutch lenders build in flexibility, allowing borrowers to overpay or move home without excessive charges. Meanwhile, UK lenders resist change, sticking to short-term products that offer no real security. The Dutch market proves that longer-term products can exist without locking borrowers into rigid agreements.
If this system works in the Netherlands, why can’t it work in the UK?
True innovation is long overdue
The UK mortgage market is crying out for similar innovation and that’s exactly what we are trying to do. Borrowers want stability but also need flexibility – if there was a greater choice of modern, longer-term options with rates that drop over time, fairer early exit penalties, and competitive fees, brokers would have real alternatives to recommend.
The argument that borrowers don’t want long-term products doesn’t hold up when the right products aren’t available.
The way brokers are paid is another factor. Currently, there’s no incentive for brokers to give equal weighting to longer-term fixed rate products because the commission is the same for a two-year fix and a 10-year fix.
This needs to change. A fairer fee structure that rewards brokers for considering longer-term alternatives would help shift the market.
Instead of questioning whether brokers are pushing borrowers towards short-term fixes, we should ask why lenders aren’t stepping up to offer real alternatives. The demand for long-term security is there – of course it is, it’s human nature. Brokers want to act in their client’s best interests.
The missing piece? Lenders willing to deliver longer-term products that tackle early redemption penalties and LTV improvements are not being rewarded.
It’s time for lenders to stop defending the status quo and think long term. Borrowers need more choice, brokers need fairer incentives, and the market needs a genuine commitment to long-term solutions because right now, borrowers are paying the price for a market stuck in short-term thinking.
