What is the difference in mortgage rates from a mortgage broker or a bank? A mortgage broker has more than one bank to sell mortgages. For example a mortgage broker may sell loans to Citi, Wells, Bank of America, Chase and smaller regional banks like US Bank, M and I and others. A retail bank has one source of funds, one set of guidelines, one committee to make decisions.
Banks have two channels to sell loans: Wholesale and Retail. Banks have less expense selling loans through wholesale channels, like mortgage brokers. That is why a mortgage broker can offer a lower rate than a retail bank and also can fund deals that a bank may not be able to fund. The bank offers the customer their retail bank rate. The Bank offer the mortgage broker the wholesale rate. This is why rates are lower at mortgage brokers.
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