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David Miles, the incoming member of the MPC, has this evening suggested that the worst of the UK recession may be over and house prices may have bottomed out. While there is some scepticism with...
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Saturday 2nd August 2008
Even though the UK has one of the more advanced mortgage markets in the world we often hear stories of people being unhappy with the services they receive, the commission they pay and the rates they are charged. But is it any better in the US?
The first thing to say is that the UK is far and away more transparent than any area of the US mortgage broker market with fees and rates having to be disclosed from the outset. UK mortgage brokers are given a package to sell at a set rate and receive a commission for any business which they pass over, however in the US it is very different. US mortgage brokers are given basic terms for mortgage agreements, i.e. what interest rate the mortgage company will charge for a certain sized mortgage.
US brokers are then allowed to add their own mark-up to the interest rate quoted meaning that they will have a continuous flow of income into the future (for successful deals). While many US brokers will have a defined mark-up, some will try to read the market and charge what they believe each client can withstand. So are US brokers more profitable than their UK counterparts?
In reality there is not much difference because the majority of mortgage enquiries in the US market will not be closed, leaving more time spent on unprofitable activities. In the UK it is very much more straight forward, easier to understand and forecast. |
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