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Mortgage lenders try to lure home buyers with ‘buy now, refinance later’ and ‘get the seller’s mortgage rate.’ Will these tactics work?

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Mortgage lenders went through a serious downturn last year, and many companies were forced to lay off staff in an effort to remain in business as interest rates jumped and buyers fled. Now the players are back and ready to fight for market share, trying out new promotions designed to attract home buyers. 

Will these tactics work in boosting business? “If the economic backdrop is not favorable, we’ll see lower mortgage rates — but that may not be enough to spur lending activity,” Greg McBride, chief financial analyst at Bankrate, said.

“It’s not just a function of what happens with rates … if the economy is on a very weak footing, that’s going to temper demand among many would-be homebuyers,” he added.

‘Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months.’

— Doug Duncan, senior vice president and chief economist at Fannie Mae

Overall, sentiment is still pretty weak: Only 17% of consumers surveyed by Fannie Mae
in January said that it’s a good time to buy a home, compared to 52% in January 2021.

“Consumer sentiment toward the housing market remains subdued by historical standards,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement.

“Until we see improvements in affordability via lower home prices and mortgage rates, we expect home sales to remain muted in the coming months,” he added.

Lenders are trying out new tricks to boost interest — and demand — for mortgages. Here are three new promotions that MarketWatch spotted in the last few weeks.

Buy now, but refinance later 

Seattle-based Flyhomes’ mortgage division is offering a “Buy Now Refi Later” promotion, where a homebuyer who takes out a loan with the company can refinance for free later if rates drop. This helps them avoid refinancing fees, and other costs. 

Refinancing involves the buyer paying closing costs, which on average are about $5,000, according to Freddie Mac
The cost of refinancing a mortgage can also vary between 2% to 6% of the loan amount, per LendingTree.

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,” Flyhomes Mortgage 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 homebuyers. 

“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. 

Wrap the mortgage process up in one day 

New York City-based is offering a one-day mortgage process to speed things up for homebuyers. The company said that the traditional loan approval process takes days to complete, while their product allows consumers to get their pre-qualification letter within a few hours.

“We launched in beta this time last month,” Vishal Garg, founder and CEO of, told MarketWatch. has now done $188 million in one-day mortgage funding commitments so far this year, Garg said.

Other companies also offer fast approval processes. But’s push to speed up the mortgage process could appeal to those who had recently gone through the traditional route and felt like “it took forever,” McBride said. 

Sellers can transfer their rate to the buyer

Anaheim, Calif.-based Carrington Mortgage Services, is talking about helping buyers get  “assumable mortgages” where qualified home buyers can purchase a home, and also take over the seller’s mortgage rates. 

This is especially interesting, as some sellers have secured ultra-low mortgage rates and are worried about that precious deal going away.

“The idea of assuming a mortgage that may have been originated at 4% as opposed to getting a new one at 6% or 7% is particularly appealing,” McBride said.

“That’s not a message that necessarily would have resonated during years when rates were falling,” he added. 

The company did not respond to a request for comment from MarketWatch.

Assumable mortgages have been around for decades, but it has been largely untapped — for a good reason. 

While the move is highly desirable in principle, it’s also incredibly complicated to pull off. These loans are notoriously tricky and hard to operate, as HousingWire described recently

‘It was insane,’ as rates jumped to 7%

Mortgage lending companies are pulling out all the tricks in the book to try to attract home buyers as the housing market slowly emerges from a slowdown. 

Back when rates jumped from 3%-4% to 7% in November, lenders said they were spooked. “We were really scared,” Garg said.

“The 475 basis point increases in a row was just excruciating,” he added. “Honestly, we were just hanging on.”

Richards joined the company in September last year, a few months after rates jumped. “It was insane,” Richards said. “No one could have foreseen this. And to hit above 7% on average for a 30-year fixed was just completely unforeseen.”

On Wednesday, the Mortgage Bankers Association said that after five weeks of rates dropping, they went back up again in the latest survey. And buyers were pulling back once again.

For the rate-sensitive, while many of these deals on offer may not be brand new or game-changing, they’re still deals that may make sense for their needs.

The bottom line: These promotions won’t move the needle on volume drastically, given the dynamics of the broader housing sector. Even if rates do come down, “the inventory of homes available for sale is still very limited,” McBride said, particularly for first-time buyers looking for their starter home.


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