Mortgage brokers generated £1.6 billion in revenue in 2025, with more than three quarters coming from commission, according to new figures from the Financial Conduct Authority (FCA).

The regulator says mortgage broking revenue rose 15.9 per cent on the previous year, with commission accounting for 77.5 per cent of the total.

For borrowers, the numbers highlight the point that a “fee-free” mortgage broker is still being paid.

The difference is usually just who hands over the money, which those looking to purchase a home should know about.

How does a fee-free mortgage broker get paid?

Most brokers are paid a procuration fee by the lender when a mortgage completes. That applies regardless of whether the broker also charges the borrower or not.

David Hollingworth, associate director at L&C Mortgages, explains: “Lenders will pay all brokers a procuration fee for introducing customers to them. Some brokers will charge a broker fee to the customer as well as receiving the commission payment from the lender, while others will work solely off the procuration fee.”

He says lenders typically pay around 0.35 to 0.45 per cent of the mortgage amount, although it can be higher for buy-to-let and specialist borrowing. That works out at roughly £350 to £450 on a £100,000 mortgage.

A broker that also charges the customer might levy a flat fee of around £300 to £500, Hollingworth says, although some charge as much as 1 per cent.

Sam Richardson, money editor at consumer group Which?, says: “Commission is part and parcel of the way the mortgage broking industry operates, so as a consumer, this shouldn't be a cause for concern. However, it's important that your mortgage broker is transparent about any fees they charge and the commission they stand to make on your mortgage deal.”

The FCA notes that it changed the methodology used to prepare its intermediary data in 2025, meaning some firms may have moved categories and figures before and after 2025 are not directly comparable.

Do fees and commission affect which mortgage I’m offered?

The obvious concern is whether a broker could favour a lender that pays more.

Hollingworth says procuration fees are fairly consistent across mainstream lenders.

Paul Waterfall, founder of WR Ethical, adds that FCA rules are clear that commission levels should not drive recommendations, although he believes abuses can happen.

“It is possible to ‘game’ the system – the FCA guidance is clear, but proving breaches, and enforcement, can be hard, unless it is blatant.”

FCA research published in 2018 found that commission levels did not appear to be linked with customers paying more for a mortgage. Brokers that placed business with a larger number of lenders sold cheaper products on average.

The research is several years old, so it can’t settle the question for today’s market. But it suggests borrowers should look beyond whether a broker earns commission and should certainly ask how widely they search for a deal which suits the homebuyer.

What does ‘whole of market’ really mean?

The term whole of market is often taken to mean a broker checks every mortgage available. In practice, it isn’t quite that black and white.

FCA rules require firms to explain limits on the range of mortgages they consider. A broker can offer what the rules describe as an unlimited range across the relevant market, while not considering deals available only directly from lenders - provided it tells the customer.

So a whole of market broker can still miss a direct-only deal.

Richardson says: “It's also worth checking that your broker is 'whole-of-market', as this means that instead of being restricted to a single panel of lenders, your broker can check all the options to get you the very best deal.”

A useful follow-up is to ask whether the broker considers direct-only products and whether there are any lenders or types of mortgage it doesn’t cover.

Should I pay a broker or use fee-free?

A fee-free broker is not automatically better value, and paying a fee does not automatically buy better advice.

Mr Hollingworth says some customers may choose to pay for something they particularly value, such as face-to-face advice, while Mr Waterfall argues that a fee can support a more hands-on service over the months between first considering a mortgage and completing.

“In short, mortgage advice, done well, is not simply transactional,” he says.

That might include monitoring rates after a deal has been reserved and switching to a better option before completion, as well as helping with more complicated circumstances.

But the broker fee still has to earn its keep. Hollingworth says a fee of 1 per cent of the mortgage amount would effectively add 0.5 per cent to the pay rate of a two-year deal.

Before appointing a broker, ask how they are paid, what you will pay directly, whether commission varies by lender, how wide a range they search and what service continues after the initial recommendation.

A broker being “free” tells you only that you are not paying them directly. It doesn’t tell you how broad their search is, whether there are deals they can’t access or how much support you will receive.

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