The mortgage sector has always been competitive, with pricing as the obvious differentiator. But rate is no longer enough on its own.
Price is still important for brokers who need to secure suitable financial outcomes for their clients. However, our H1 Mortgage Lender Benchmark findings shows how lenders are selected depends on several factors. Alongside pricing, brokers are also weighing up criteria flexibility, ease of process, service reliability and speed.
This shift matters in the current UK context. Mortgage pricing continues to move in response to Bank Rate changes, swap rates and ongoing uncertainty around inflation.
With rates changing quickly and lenders frequently repricing, brokers are also choosing lenders they can rely on for a smooth and consistent service. But just how much weight do non-price factors carry?
What matters most to brokers when selecting a lender
First and foremost, it’s no surprise to see that pricing is still important. But while most brokers (79.9%) identified rates or pricing as one of the factors they consider when choosing whether to place business, less than 16% of brokers said that pricing is the only factor they consider when choosing a lender. Over 84% also consider at least one non-price factor, and more than three quarters (76.1%) consider at least one service or experience-led factor such as speed, reliability, ease of process or previous experience.
Competitive rates might secure a place on a shortlist, but brokers still need confidence the application process will work in practice. Criteria flexibility, predictable underwriting and ease of process service all clearly carry growing weight.
That may partly reflect the environment brokers are operating in. The FCA has signalled further work to mortgage rules this year, with responsible lending and advice quality remaining central. With criteria interpretation and adviser judgement arguably more important than ever, certainty is crucial. Clear criteria and dependable service reduce the risk of wasted time and frustrated clients.
This matters because while lenders can usually adjust pricing relatively quickly, building a reputation for reliability takes much longer.
Are lenders overestimating the role of pricing?
One of the most interesting takeaways from our research comes from the gap between lender and broker perceptions. Over 70% of lenders believe they most commonly lose business because their pricing isn’t competitive enough. By some distance, this was viewed as the biggest reason cases go elsewhere.
But brokers say something different. Almost 90% identified poor service history, slow processing or previous negative experiences as reasons to avoid a lender.
It’s possible that some lenders may be interpreting lost business as a pure pricing issue, when broker confidence has already been weakened by delays, communication problems or inconsistent service.
This reinforces the view that a lender can reprice rates overnight, but rebuilding trust with brokers takes considerably longer.
Some brokers are placing more business with fewer lenders
Another trend from the findings could add further pressure for lenders. Nearly one in three brokers said they’re placing more business with fewer lenders than they were 12 months ago. At first glance, that may seem surprising given the wide range of options available.
But the reasons behind it somewhat explain things. For brokers who’re choosing to work with fewer lenders, trust in service came out as the biggest factor, closely followed by speed and efficiency. Competitive rates still matter, but as explained earlier, confidence that a lender will deliver a reliable experience is increasingly important.
This has major implications for lenders. As brokers lean more heavily on lenders they trust, a poor experience could have consequences beyond a single case. Over time, inconsistent service may mean a lender is overlooked altogether when future business is placed, regardless of any overnight rate changes.
For lenders already seen as reliable partners, this creates an opportunity to strengthen broker relationships and grow their share of the market.
