What are Mortgage Aggregators / Dealer Groups?
Mortgage Aggregators, Dealer Groups and even Franchise Groups are sometimes
referred to as acting as a wholesaler between lenders and Mortgage Brokers. Here
all of these bodies are 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 have 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 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 aggregators not only offer brokers access to the lenders but also
offer support services for their members. The support offered varies between
aggregators and can 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 their members the ability to be an authorised Credit
Representative under their Australian Credit Licence (ACL) so that the broker
would not then need to obtain a licence themselves. This can also be necessary
if the broker is new to the industry and does not yet have two years experience.
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 fee and a franchise will typically
charge a franchise fee.
Working with an aggregator offers brokers the ability to operate their own
business, 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
broker) and subsequently receive products that match their needs and individual