Many UK consumers seem to be less sensitive to fees charged by mortgage lenders than to interest rates, and firms appear to exploit this behaviour, a working paper published by the Bank of England finds.

In Non-salient fees in the mortgage market, Lu Liu studies pricing dynamics in the UK market, noting that while mortgage products are highly standardised, prices differ widely, as does the use of fees relative to interest rates when pricing mortgages.

Liu finds that if one assumes consumers