Trail is the second half of how Australian mortgage brokers are paid. The upfront commission arrives once, at settlement. Trail arrives every month afterwards, for as long as the client keeps the loan with the lender that paid it. Most residential lenders pay between 0.15% and 0.20% of the outstanding balance per year, split into twelve monthly payments and routed through the broker's aggregator.
Because it is calculated on the balance, trail falls slowly as the client pays the loan down and falls to zero the month the loan is refinanced, sold or discharged. That makes the total trail on a book a function of two things the broker can influence: how long clients stay, and how quickly they repay. A client who refinances in year three takes the remaining twenty-plus years of trail with them.
Trail is also the asset that gets valued and sold. A broker retiring or changing aggregator sells the right to receive future trail, priced as a multiple of the annualised amount. The same run-off that erodes monthly income erodes that sale price.