Study Reveals Brokers Are Better For Borrowers' Wallets

“Brokers are better” is a popular catch-phrase among mortgage brokers, but now the number one wholesale lender, United Wholesale Mortgage (UWM), has set out to prove that statement true. A recent study from Polygon Research, supported by UWM and Willow Canyon Advisors, used 2023 HMDA data to find that consumers save more than $10,000, on average, by working with a mortgage broker compared to a nonbank retail lender.

UWM and Willow Canyon Advisors asked Polygon Research to analyze mortgage lending outcomes from the past four-to-six years having to do with loan costs by loan type, and by Census tract characteristics. Using 2023 HMDA data, researchers found that consumers save an average of $10,662 over the life of the loan when working with an independent mortgage broker as opposed to a nonbank retail lender.

“This data further proves that when consumers work with an independent mortgage broker, they typically save thousands of dollars, and almost always have a faster, more seamless and personalized experience,” said UWM CEO and President, Mat Ishbia. “The broker channel has seen tremendous growth over the last few years because of these direct consumer benefits. We don’t believe it is unrealistic for the channel to reach 50% market share and will do all we can to support our partners and educate borrowers.”

Borrowers are also able to save money in upfront costs by working with a mortgage broker, according to the Polygon study. While every borrower in 2023 was affected by high interest rates and low inventory, consumers who secured their mortgage through the wholesale channel paid an average of 115 basis points upfront to obtain a 6.58% average interest rate, compared to 148 basis points upfront and a 6.60% average interest rate in the nonbank retail channel.

Beyond the savings over the life of the loan, the study also concluded that veterans and minorities benefit significantly by going through the wholesale channel. The amount of money that can be saved by working with a broker on VA loans, specifically, was substantial. The study found borrowers save an average of $13,432 per loan when working with an independent mortgage broker as opposed to a retail lender. Additionally, VA borrowers who got their loans through the wholesale channel received a 6.26% rate, on average, compared to a 6.40% rate from retail lenders.

The wholesale channel also saw a higher percentage of home purchase loans originated to minority borrowers compared to the retail channel. Among non-bank lenders, the wholesale channel had higher approval rates (70%) in 2023 for all loans in Majority Minority Census Tracts (MMCT), where more than half the population is made up of minority groups. This is compared to compared to the 58% approval rate of retail lenders. The wholesale channel also had a higher approval rate in non-MMCT, at 75% compared to 64% for retail.

“The research shows brokers not only offer better deals on average, but also excel in reaching minority communities, especially in times when affordability is a key concern,” said Jonathon Haddad, CEO of the Association of Independent Mortgage Experts (AIME). “The numbers in this study speak for themselves, and further underscore the importance of educating consumers across the country on the benefits of getting a mortgage with an independent mortgage broker.”

“For years, our own analysis has shown that mortgage brokerages supported by wholesale lenders provide consistently better value to consumers,” said Willie Newman, principal of Willow Canyon Advisors. “It’s exciting and validating to see that this is supported by an expert third-party research company, and that the 2023 results continue supporting the mantra ’brokers are better.’”