Lenders offer lower prices to brokers because brokers perform costly services for them that they would otherwise be forced to provide for themselves. The most important of these services is finding and servicing customer needs. Absent mortgage brokers, lenders must maintain a costly sales and loan-processing force plus the infrastructure required to support it. To determine what this is worth in upfront fees, the rate difference must be converted into points. This is an imperfect exercise because lenders vary widely in how they trade off rate against points.
Mortgage brokers can shop lenders much more effectively than consumers.
Brokers are in the market every day, where consumers are in the market a few times during their lives. Brokers receive price information from lenders daily as a matter of course. They know the features of the transaction that affect the price and underwriting requirements. They have relationships with multiple lenders, and are therefore well positioned to find and shop among the lenders offering particular features. And they know the lenders who take 10 days to underwrite a loan and those who take one day.