Brokers say lenders must urgently review the amount they pay in product transfer (PT) procuration fees as it increasingly does not cover the work involved — with customers paying the price for this cost cutting.

The mortgage market has undergone huge changes in recent years, with PTs making up £240bn of lending in 2023, £221bn in 2024 and an estimated £240bn in 2025, according to the Intermediary Mortgage Lenders Association — far outstripping remortgages.

Additionally, the amount of work brokers are required to do for a typical PT has grown hugely.

In recognition of this, many lenders have begun to increase their proc fee for PT cases.

There doesn’t appear to be anyone fighting the corner of the broker on this

Yet most of them, including almost all the main players, still insist on paying only around 0.2% for residential PT proc fees, as opposed to a norm of 0.4% for house purchases and remortgages.

Is it time, at long last, for more lenders to take residential PT proc fees seriously and pay brokers what they deserve?

Lender variations

The amount brokers receive in PT proc fees varies by lender as well as by whether the broker is part of a network or club.

Most large lenders, including Barclays, HSBC, Nationwide and Santander, pay 0.2% as standard. But some firms routinely pay more, such as The Co-operative Bank for Intermediaries, which pays 0.3%.

When some are paying higher proc fees, the question will always be, ‘Why aren’t the others?’

Virgin Money’s residential proc fees vary for PTs, but as an example are 0.38% for brokers within Sesame.

Skipton Building Society has long paid brokers 0.3% for residential PTs, and Halifax pays 0.4%.

But in the past two years several other lenders have begun reviewing their PT proc fees, and increasing them.

In October 2023, Family Building Society announced it would pay brokers 0.4% for PT proc fees, in line with what it paid for residential purchases and remortgages. At the time, Family Building Society head of intermediary sales Darren Deacon said: “We appreciate the hard work that intermediaries do in this ever-changing interest rate environment.”

In 2024, more lenders followed suit, including: Bath Building Society, which raised its residential fee to 0.3% in August; April Mortgages, which has been paying 0.45% in proc fees for PTs since September; and Newcastle for Intermediaries, which in December boosted its proc fees for PTs to 0.3%, to reflect the greater work intermediaries were putting in.

The proc fee on many occasions doesn’t cover our time. We need to be valued and paid fairly

However, while a handful of lenders have increased their proc fees for PTs, most have not raised their rate for years.

L&C Mortgages associate director of communications David Hollingworth says: “You get quite a bit of variation between lenders as to how they approach the PT proc fee. Some will be paying half, typically 0.2%. Some will pay full proc fee. Some will be in between, paying maybe 0.3%.

“So there is variation, which I think does give that discussion more momentum.”

He adds: “When some are paying higher proc fees, the question will always be, ‘Why aren’t the others?’”

‘Market distortion’

While lenders argue that house-price growth has helped increase PT proc fees, brokers say the extra work required far outstrips this.

Mortgage Advice Bureau deputy chief executive Ben Thompson can see both sides of the argument.

There are ways to enhance efficiency in both sourcing and maintaining client relationships

He says: “If I take the lender position, it all looks very easy from the outside but, if I’ve been paying 20 bps for PTs for the last X number of years, and I pay 30–40 bps now, it’s suddenly a significant hike to my profit and loss, especially if I’m only increasing my retention percentage from 70 to 75, for example.

“If I then take an intermediary perspective, purchase and remortgage proc fees are pretty horizontal. I would say these have been horizontal, equitable and settled for over a decade and, although we all want to be and feel we should be paid more, this area works OK.

“With PTs it’s very different. From memory, five of the top-six lenders are paying two-thirds to half of what some of the other lenders are paying, and obviously that’s an inconsistent place to be, and it fuels an unhelpful market distortion.”

177 Mortgages chief executive Alastair McKee says: “Even for brokers that do charge fees, they find it hard to justify on a PT.

Charging a broker fee should not be viewed negatively; rather, it should be recognised as a reflection of the time, expertise and dedication required

“If you’ve got a commercially aware broker, and you’ve got lenders A and B, and the rates and terms are exactly the same, fast-forward to the end of the deal and the commercially astute broker is going to be looking at which of those lenders is offering the better PT process and the better PT proc fee.”

Broker workload

For Lentune Mortgage Consultancy director Stuart Gregory, a conversation on proc fees is “very much overdue”.

He says: “The level of proc fee should be the same regardless. Just because it’s simpler for a lender to do a PT doesn’t mean they should pay brokers half of what they usually pay them. When you look at the fact that the regulatory costs for brokers only go up, not down, we end up doing more work to tread water.

“There doesn’t appear to be anyone fighting the corner of the broker on this.”

There is only so much that the market will stand; brokers can’t just keep pushing fees up

Brokers say the more dynamic rate environment of recent years, combined with their enhanced responsibility to customers under the Consumer Duty, means PTs require far more work than previously.

Xpress Mortgages mortgage and protection adviser Rachel Lummis observes that times have changed.

“Proc fees for PTs do need to be looked at because over the years the market has completely changed and the way mortgage advisers work looks very different,” she says.

“In the past, the PT process was relatively simple and one might have said that the reduced proc fee paid for a PT reflected the work involved. The process was far quicker than a remortgage and with far less paperwork, time and stress.

“I was content enough with the proc fee level a few years back and it was an added bonus if the PT was with one of the handful of lenders that paid a full PT fee.”

Lenders don’t offer this advised and monitored service to their existing customers

Lummis continues: “But the PT market has been huge in 2023 and 2024 and it’s time that the level of fee was reviewed. Hats off to those lenders that have already reviewed and increased their PT proc fees.”

John Charcol head of marketing Nicholas Mendes agrees.

He says: “Brokers must continuously monitor lender offerings, track market changes and ensure that their clients’ applications remain aligned with the most favourable rates and terms. When a lender reduces rates after an application has been submitted, brokers often have to go through the process of re-sourcing, updating documentation and submitting again — sometimes multiple times depending on the lender’s PT window.

“Despite this added workload, procuration fees have largely remained static, failing to reflect the additional time and effort brokers now dedicate to each case. Larger lenders should recognise the significant role brokers play in keeping clients on the best possible deals, and consider whether their remuneration structure is aligned with the level of service brokers provide.”

Level playing field

According to Thompson, lenders should commercially be able to afford higher proc fees for PTs because they are saving money elsewhere.

He says: “When commercial terms are fair, they tend not to be discussed. I hear no noise about procuration fees for purchase or remortgage business, yet continuous noise and exasperation about proc fees for PTs. There is a reason for that.

If the lenders do want to stick to 0.2%, there needs to be a minimum amount involved, say £250

“Proc fees are a cost of distribution and are a fixed and known percentage within a lender’s pricing model. Effectively, they replace what has become the increasing cost of high-street distribution and the unpredictable and highly competitive variable costs of media buying.

“Although lenders have their various challenges that everyone acknowledges, they are also able to acquire business easily through intermediaries at a known and predictable cost, and also stay immune and at arm’s length from any advice risk.

“The least those that pay low proc fees for PTs can do is find a way to level the playing field in this area, or at least take a proper, meaningful step in this regard.”

It is even possible for brokers to lose money or barely break even on PT proc fees for lower mortgage amounts.

Gregory says: “On some mortgages under £100,000, we’ve earned less than £100. That’s for two members of staff and consistent monitoring over months.

“It’s a lot of work for next to nothing. So the result is the client ends up paying a fee regardless.

“If the lenders do want to stick to 0.2%, there needs to be a minimum amount involved, say £250.”

The PT market has been huge in 2023 and 2024 and it’s time that the level of fee was reviewed

This is even more pronounced for brokers in regions of the country with lower house prices, which tend to require smaller mortgages and therefore entail lower proc fees.

Gregory adds: “I’m lucky where we’re based [in Hampshire] as the property values tend to be really high. If I was in a region like, say, Blackpool, it would be much harder.”

Brokers can even receive less than the benchmark 0.2% for PTs if they are part of a network or mortgage club, which can negotiate enhanced rates but will also keep some of the gross fee.

Harm to customers

Intermediaries warn that, if a broker does not earn enough in proc fees for PTs, it is customers that end up paying the price for lenders’ thrift.

Lummis says: “The customer has to be front of mind. They need to get the best deal possible and they need advice. Advisers will monitor the rates and get the offer issued, time and time again, providing advice throughout the entire journey.

Just because it’s simpler for a lender to do a PT doesn’t mean they should pay brokers half of what they usually pay them

“The proc fee on many occasions doesn’t cover our time. Lenders don’t offer this advised and monitored service to their existing customers.”

She adds: “Mortgage advisers are happy to, but we need to be valued and paid accordingly, and fairly, so that we can continue to give customers the service and attention they deserve.

“A 0.2% proc fee on a £100,000 product transfer won’t cover the cost of the work involved and, if advisers can’t afford to provide this service, it will be the customer who suffers.”

Hollingworth says even charging customer fees is not a silver bullet for replacing lost income from lenders’ inflexibility on PT proc fees, because broker fees can only be increased by so much.

He says: “There is only so much that the market will stand; brokers can’t just keep pushing fees up.

The commercially astute broker is going to be looking at which of those lenders is offering the better PT process and the better PT proc fee

“The danger is that lenders are increasingly reliant on broker distribution. What you don’t want to do is reduce the accessibility of that advice by there being pressure that is funnelled onto the customer.

“We are remaining fee free and hopefully we can keep the cost of advice as low as possible.”

Professional service

But other brokers say charging an appropriate fee is something to be proud of because it highlights the professional service a customer receives.

If I’ve been paying 20 bps for PTs for the last X number of years, and I pay 30–40 bps now, it’s suddenly a significant hike to my profit and loss

“Charging a broker fee should not be viewed negatively; rather, it should be recognised as a reflection of the time, expertise and dedication required to navigate the increasingly complex mortgage landscape,” says Mendes.

“Brokers provide immense value to their clients, and their remuneration should reflect the specialist knowledge and tailored service they deliver.”

Intermediaries could also save money by looking at their workflow processes, adds Mendes.

“There are ways to enhance efficiency in both sourcing and maintaining client relationships,” he says. “The use of automation, for example, can streamline administrative tasks, improve client communication and free up valuable time for brokers to focus on advisory work.

We appreciate the hard work that intermediaries do in this ever-changing interest rate environment

“Customer relationship management systems, automated rate tracking and digital application tools can all contribute to greater efficiency without compromising on service quality.”

The PT proc fee debate has been heated for years and has become even hotter with the market shifting towards PTs and with rates being in a state of relative flux.

Brokers are not asking lenders for unfair sums, they say — simply for sufficient compensation for the work they do.

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This article featured in the March 2025 edition of Mortgage Strategy.

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