The hot new thing in the moribund housing market is called a mortgage buydown — it's one of theThough they've been around a while, buydowns seem a tailor-made solution for the current real estate market's biggest problem: High mortgage rates hovering around 6% have turned off buyers.Sellers, homebuilders or even lenders pay cash to lower the buyer's mortgage rate by typically one to three points.
Data: Bankrate; Note: *Table shows hypothetical scenario for the first year of a 2/1 rate buydown where the mortgage rate is 5% in the first year, 6% in the second and reverts to 7% after; Table: Axios VisualsThese deals were less likely to happen back when the 30-year mortgage rate was around 3% and demand for homes was high, said Van Welborn, a real estate agent with Redfin in Phoenix.
'this is how mortgages work already' -soon to default subprime mortgage holding time traveler from 2008
The only winners I see here are the banks
Why wouldn’t it be better to take the lower price at the start? Lower sales price means lower 30yr interest. A buydown sounds like a yo-yo and sets up home buyers for a potential default.