US mortgage lenders are introducing discounts and promotions in light of falling mortgage rates to lure reluctant home buyers. However, critics believe the latest offers fall short of the best deal for borrowers — lower rates.
A growing number of lenders, from banks to credit unions, are waiving fees, lowering rates and searching for innovative ways to slash loan prices for potential home buyers and refinancers. Capital One is offering a number of closing fees for refinancers, which will allow them to save an average of $3,300. Meanwhile, Citi and Bank of America (BoA) are discounting fees by as much as 0.75 percentage point.
Most of the deals are aimed at home buyers since new purchase mortgages are more profitable for banks. However, these mortgages only account for approximately 20 percent of all mortgage applications, said the Mortgage Bankers Association.
“We are still amazed that record low interest rates and significantly lower home prices have not resulted in strong loan demand,” said Tim Zimmerman, CEO and President at Standard Bank in Pittsburgh.
Other lenders are slashing the cost that borrowers may pay when signing up for a mortgage.
These offers are meant to draw attention away from the actual rate. But for the most part, banks are simply looking to draw in new customers or revive business with rock-bottom rates through difficult-to-achieve requirements like credit scores, down-payments and other prerequisites.
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