Soaring mortgage rates have poured cold water on America’s property market, deterring many would-be buyers from moving.

But lenders are reportedly attempting to sweeten the deal by offering free refinancing down the line.

Such agreements mean a borrower agrees a mortgage at today’s rates on the condition they can refinance in the future without paying a fee, typically worth between 2 and 6 percent of the full loan. 

The deal assumes that mortgage rates – which are currently at a multi-decade high and edging closer to 8 percent – will come down in that time.

However experts are urging homebuyers to think carefully before agreeing to a ‘buy now, refinance later’ agreement. 

Soaring mortgage rates have poured cold water on America's property market, deterring many would-be buyers from moving. Figures from Government-backed lender Freddie Mac show rates are heading for 8 percent

Soaring mortgage rates have poured cold water on America’s property market, deterring many would-be buyers from moving. Figures from Government-backed lender Freddie Mac show rates are heading for 8 percent

Jacob Channel, senior economist at Lending Tree, said mortgage rates would be unlikely to go down to the lows seen during the last few years

Jacob Channel, senior economist at Lending Tree, said mortgage rates would be unlikely to go down to the lows seen during the last few years 

Jacob Channel, senior economist at Lending Tree, told DailyMail.com: ‘Nobody can predict the future but it’s unlikely mortgage rates will go back to the record lows of the pandemic in our lifetime. It was so unprecedented. 

‘It’s more likely that they will fall to around 6-6.5 percent by the end of next year and into 2025. 

‘Many lenders won’t cover the full cost of the refinance, many just offer a $1,500 credit which isn’t enough for most loans. But if it’s not going to cost you anything take the deal. Always check the fine print.’

Generally buyers agree to a rate for the full duration of their 30-year fixed loan and do not get to benefit from rates decreasing.

If they do wish to refinance to make the most of lower rates, the average owner will pay $2,375 for a single-family home, according to 2021 data from Closing Corp. 

But, as the current market starts to slow amid buyer anxiety, lenders are offering different forms of ‘buy now, refinance later’ deals.

For example, Amplify offers no-cost, no cash-out refinances with zero appraisal fees. CrossCountry Mortgage provides a lender credit of up to $1,500. But these credits often have an expiry date of a year or two – meaning they can be rendered useless if rates don’t drop in that timeframe.

And to qualify for these deals, some lenders offer a higher rate than average upfront – on the understanding it may go down. 

Channel, from Lending Tree, cautions: ‘For these deals, I always say buyers should be confident they can cover the higher rate for an extended period of time.

‘If you think you can afford a higher rate for maybe the next two years but then you’re relying on rates coming down then I’d say right now probably isn’t the best time to buy.’

Homebuyers today face paying $500,000 more in the course of a 30-year mortgage than they would have done two years ago after rates shot up to 8 percent

Homebuyers today face paying $500,000 more in the course of a 30-year mortgage than they would have done two years ago after rates shot up to 8 percent

But, as the current market starts to slow as nervous buyers are worried to move when rates are so high, lenders offer difference forms of 'buy now, refinance later' deals

But, as the current market starts to slow as nervous buyers are worried to move when rates are so high, lenders offer difference forms of ‘buy now, refinance later’ deals

If a buyer refinances with their current lender they will also likely still pay third-party fees for services such as an appraisal. According to the National Association of Realtors, the median price for a typical, single-family home appraisal is $500. 

What’s more, buyers who see their credit deteriorate or property value significantly will also be unable to refinance down the line. 

The comments come after it was revealed more and more homebuyers are now opting for adjustable-rate mortgages (ARMs) – which garnered a bad reputation thanks to their role in the early 2000s housing meltdown.

According to figures from the Mortgage Bankers Association (MBA), 9.2 percent of all loan applications were for ARM deals last week. 

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