A broker/brokerage has to obtain accreditation with lenders in order to sell their product/s. Most brokers will become accredited with a number of lenders – called a ‘panel of lenders’. Brokers are only able to sell products from lenders on their panel. The requirements for accreditation vary from lender to lender, as too does the size of each broker’s panel. Some lenders have minimum volume loan requirements in order to achieve and maintain accreditation.
Mortgage Aggregators, Dealer Groups and even Franchise Groups act as an intermediary between lenders and Mortgage Brokers. For the purpose of this article we will refer to all of these bodies as Aggregators.
These Aggregator groups have evolved from the early days of the Mortgage Broking industry. Initially they began as a network of independent mortgage brokers who, through the process of bulking loan volume, were able to negotiate better lender commission terms and meet minimum loan volume requirments. Today an Aggregator is an independent entity that will enter into contracts with a number of lenders to whom it can introduce prospective borrowers (“panel lenders”).
An Aggregator will also enter into contracts with a number of Mortgage Brokers and/or Mortgage Broking Firms, authorising them to introduce prospective borrowers to the previously mentioned panel of lenders. Where the Mortgage Aggregator enters into a contract with a Mortgage Broking Firm, that Mortgage Broking Firm may in turn enter into contracts with a number of other Mortgage Broking Firms or Mortgage Brokers as process commonly know as Sub-Aggregation.
Through the process of Sub-aggregation there may be a series of agreements between Mortgage Broking Firms however, ultimately, there will be an agreement between a Mortgage Broking Firm and a Mortgage Broker which authorises the Mortgage Broker to introduce prospective borrowers to the Aggregator’s panel lenders.
With the help of Aggregation groups, Mortgage Brokers are able to provide a sustainable benefit to consumers. Customers benefit from being able to compare different mortgage products available from a panel of lenders through one source (the Mortgage Broker) and subsequently receive products that match their needs and individual circumstances. Increased competition due to Mortgage Brokers operating within the industry has been noted as a key factor in the reduction of fees and interest rates for all Australians.