Jeff Ostrowski, Bankrate.com
Reduced rate. Discounts on future purchases. Fast delivery.
No, these are not promises of starting up for car dealers or enthusiastic e-retailers. They come from mortgage lenders.
The incentives reflect the harsh reality of a living scene. Since 2021, the mortgage rate has more than doubled. Predictable results: American consumers, particularly home buyers, have significantly reduced their appetite for borrowing. ATTOM Data Solutions reports that mortgage origination plummeted 57% from the fourth quarter of 2021 to the fourth quarter of 2022. As mortgage rates remain stubbornly high, borrowers remain passive. In the third quarter of 2024, Americans took half the mortgages that were made during the same period in 2021, says Attom.
With the decline in applications, lenders are placed in a tough position. And like sellers in slow markets, they responded with hanging transactions, ensuring home buyers looked beyond the rate stage. One major lender has launched a compensation program that echoes what retailers, airlines and credit cards are using.
Now that lock bottom rates are no longer driving your business, here’s how you can navigate borrower-friendly strategies:
Refinance savings: bet on low prices
The rising interest rates have affected not only the purchase loan but also the refinance business: mortgage fees flirt with 7% of Bankrate’s national survey of lenders on February 19th – they’ve been one year old Double it – There is very little incentive for mortgage advocates to exchange them and get their old loans out.
Many housing economists expect mortgage rates to fall below 6.5% by the end of 2025. If that scenario occurs, it may make sense for today’s home buyers to refinance in the not too distant future. Still, refinancing is not cheap. Closure costs total 3% to 5% of the amount of the loan.
Big lenders know that, so they are trying to sweeten the pot for future refis. For example, the rocket responded with what was called rate drop advantage. Borrowers who fund purchases with Rocket will receive a discount on the closure fee when they have a refinance four months to three years after the initial closure. Lender credit at the time of closing covers fees for valuations, credit reports, records and other expenses. The savings total is around $2,200.
In a similar tactic, lenders better unveiled Forever, a loyalty initiative designed to reward borrowers by waiving future refinancing and purchasing loan accrual fees. This discount has been made public to customers who have funded loans on BetterMortgage any time since 2019. A $400,000 mortgage will save $2,500, says Vishal Garg, CEO and founder of Better.
Chase Home Lending announced in mid-February that it was running a “fee sale” for refinancing mortgages. Chase didn’t say how much the discount was worth. Savings vary depending on the borrower and the type of loan, the lender said. At the time of writing, this offer is in good condition only until March 7th.
Rewards for tenants
Better rewards are repeated for borrowers, but Rocket aims to be a first-time user. On February 18th, Digital Mortgage Giant announced Rocketrent Rewards. This announced that borrowers will have a total of up to $5,000, equivalent to 10% of their rental payments over the past year. The discount applies to closing costs. Considering that the national average rent payment is $1,800 a month or $21,600 a year, the program is worth $2,160 for a typical buyer. The promotion can be used not only by home buyers, but also by buyers who rent while selling their locations and searching for a home, says Bill Banfield, Rocket’s chief business officer.
Other Temptations: Fast Results and Bonus Points
Lenders are increasing the bland volume of a variety of other bland. One temptation is the form of a fast answer regarding your mortgage application.
Ally Bank promises to pre-approve the applicant within three minutes. Better.com promises a complete commitment letter at a lock-in rate within 24 hours of a program called “a one-day mortgage.” You may also put $1,000 in lender credit to apply to closing costs. However, the name is a bit of a false reputation. The commitment will be faster, but it can take weeks to reach the closure table and actually get a loan.
Advertising fast results is nothing new in the industry. For example, for several years, Movement Mortgage has promised to complete loan processing within a week with qualified applicants who have been fully underwritten within six hours.
Rocket Mortgage has acquired pages such as Starbucks and American Airlines. With the new Rocket Rewards program, potential home buyers can take advantage of points by completing a variety of activities on the company’s website, including watching videos, reading articles about homeownership, and using a mortgage calculator. You can earn it.
Members can earn 7,500 points (7,500 points, worth $75) just to sign up for an account. Idea: Borrowers redeem points when they buy a home. The balance will be deducted from closing costs.
Final Words on Lender Transactions
All of these promotions help borrowers feel more comfortable buying a home when mortgage rates are high. However, remember that shopping is probably the most powerful weapon in the borrower’s arsenal. Refinance promotions in particular remove that option by locking it with a specific lender for the next refi. And the promise of a prompt approval decision does not necessarily mean approval.
So don’t try not to look at all the basics of a lender’s offer in a sweet sound transaction.
©2025 Bankrate.com. Distributed by Tribune Content Agency, LLC.
Original issue: February 25th, 2025, 1:40pm
