What are Mortgage Aggregators / Dealer Groups?
Mortgage Aggregators, Dealer Groups and even Franchise Groups act as a wholesaler between lenders and Mortgage Brokers. Here all of these bodies are will referred to as Aggregators.
For a mortgage broker to be able to introduce loans to a lender and get paid by that lender, they would normally need to work with an aggregator. The reason for this is that most lenders have volume and compliance requirements that the average broker would be unable to sustain unless they were a large business. Even then, they might only be able to maintain the volume required to a few lenders and need to employ staff to manage their compliance and relationship with the lenders. This could greatly reduce the offering they had to their customers and increase their overheads and work load.
Aggregators have evolved from the early days of the Mortgage Broking industry. Initially they began as a mortgage brokers were approached by new brokers wanting access to lenders through their accreditations. Over time, through the process of bulking loan volumes (or aggregating these volumes ), they were able to negotiate better lender commission and service levels from lenders and set up systems and processes.
Today most aggregator not only offer brokers access to the lenders but would also offer support services for their members. The support offered varies between aggregators and could include services like software (loan comparison, loan lodgement, CRM management), training (lending, sales and compliance), Management support, lead generation, branding and back office support. The aggregator or franchisor may even offer there members the ability to be an authorised representative under their Australian Credit Licence (ACL) so that the broker is not required to obtain a licence themselves.
The aggregator will generally charge some sort of fee for offering these services. These fees may be in the form of a percentage of the fees received from the lenders or they may charge a fee per transaction or a flat monthly or annual fee. Some groups also charge a joining administration fee or franchise fees.
Most aggregators will also offer their members more than just lending products to offer clients that the broker would not otherwise have access to or be able to sell to their clients.
Working with an aggregator offers brokers the ability to operate there own business their way, offering a wide variety of lenders and loan products, but with the support of the aggregator.
With this assistance a Mortgage Broker is 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.