Save sales and marketing expense. Mortgage brokers are responsible for all the sales and marketing required to find clients. Lenders in effect have a large sales force with little overhead cost. Remember, mortgage brokers obtain rates at wholesale, mark up these rates by adding points and then quote you a retail rate. This is similar to what a travel agent does.
Travel agents obtain discount pricing as a result of their volume.
These points are paid by the lender and may be known as Premium Pricing, Service Release Premiums, or Rebate Pricing. These points are not charged to you the borrower, but you do pay the higher rate. The broker has to charge you points to make money. In this case, the lender's points are known as a discount fee and the broker's points are known as an origination fee. It is important to understand that brokers do get a wholesale rate and are providing a valuable service and deserve to get compensated.