Mortgage rates rose for the second consecutive week in mid-February, with the 30-year fixed-rate mortgage (FRM) averaging at 6.32%. A year ago at this time, the 30-year FRM averaged 3.92%. In order to get buyers interested today, MarketWatch’s Aarthi Swaminathan reports lenders are trying out new promotions designed to attract people to buy. For example, Seattle-based Flyhomes’ mortgage division is offering a “Buy Now Refi Later” promotion, where a home buyer who takes out a loan with the company can refinance for free later if rates drop.
For Flyhomes, offering to cover the cost of refinancing was their way of telling the buyer that they should not wait for rates to go down before purchasing a home.
“We want to remind these buyers that they can actually refi a mortgage loan in the future — a 30-year fixed loan doesn’t really mean 30 years,” Dan Richards, executive vice president of Flyhomes Mortgage, told MarketWatch.
The company also admitted that it was only breaking even, by offering to cover the refinancing costs for home buyers.
“We’re not going to make any money on the [refinancing],” Richards said. “But we want to engender a long-term relationship with the customer.”
Other companies also offer this promotion. But the timing is deliberate. “The whole purpose was to get [buyers] off the sidelines now and help them unlock that home purchase during this period of uncertainty,” Richards said.
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