Proof of the Broker Advantage - Updated

I have spent my entire career providing services to mortgage brokers, primarily because I thought the broker/wholesale lender combination was the most efficient way to provide consumers with mortgage financing. However, for most of my career, there was no way to empirically prove whether brokers or retail originators gave consumers the best deal.??? ?

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In 2022, as CEO of Homepoint, I asked our data science team to search the mortgage ecosystem to find data that could help determine where consumers could consistently find the best deal for a mortgage. During their research, the team discovered that the HMDA data set expanded in 2018. This expanded data set gave the industry the first opportunity to directly compare the cost for consumers of obtaining a loan through retail originators vs. mortgage brokers.??? ?

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Our original analysis, released in late 2022, demonstrated an advantage for brokers from 2018 to 2021. Including the 2022 HMDA update, we now have five years of data and have updated the previous analysis to include 2022. We used data from the top 10 retail lenders vs. the top 10 wholesale lenders for conventional loans to maintain consistency. Throughout the available five years of comparable data, there is clear support for the following: ?

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1. Brokers are substantially better at reaching minorities.?? ?

1. On average, 29% of loans originated by brokers served minorities versus 17% for retail.?? ?

1. Over the five years, brokers originated over 50,000 more minority loans while only originating 64% compared to retail totals. ?

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1. Brokers provide loans at lower upfront costs and lower payments (interest rates) ?

1. On average, the upfront costs through brokers were $1,453 less than retail?

1. Payments averaged $7,357 less through the life of the loan?

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A clear demonstration of the power of brokers is seen through the lens of the largest retail lender, Rocket, who is also the second-largest lender serving brokers:?? ??

• On average, consumers working through Rocket and their broker partners saved an average of $3,429 in upfront costs ?
• Payments averaged $7,948 less through the life of the loan ?

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After five years, the data clearly supports the thesis that Brokers are Better. Brokers are much more effective at serving minorities. Brokers are also a better deal for consumers. And this is not just averages - this has been true in each of the five years data has been available to analyze.?? ?

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When using a five-year lens, the savings mortgage brokers provide to consumers are significant. Brokers have saved consumers over $3.7 billion in upfront costs from 2018 to 2022. Including the life of loan payment savings, the potential total benefit to consumers is over $20 billion. The benefits of using a mortgage broker do add up.?? ?

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After five years, the data indicated that mortgage brokers provide a consistently better deal to consumers. Brokers also are much more effective at penetrating minority communities. Especially in an environment where affordability is stressed, these advantages should support continued growth in the broker segment.?