Mortgage buydowns touted as reprieve from soaring rates

He said the tactic is now being used increasingly: “Realtors that I speak with have reported that individual sellers are beginning to offer buyers temporary buydowns,” he told MPA. “Borrowers paid by individual sellers are generally offered as a concession to avoid a reduction of the sales price and can signal a housing market where buyers are beginning to regain some control.”

The lawyer also has noticed an uptick in the method among lenders, he added: “In speaking directly with clients, I have seen multiple lenders launch temporary buydown programs with builder partners, and many others begin to explore such programs,” he said. “The goal of these programs is to make new construction homes more affordable to buyers by reducing their interest rate for the first few years of the loan.”

Some of the nation’s biggest lenders have begun to promote buydowns as well. Rocket Mortgage offers a primer on its website. “It’s no secret that purchasing a house is an expensive undertaking,” officials wrote. “When you get a mortgage, you’re not only committing to paying the purchase price of the home – you’re also agreeing to pay for the privilege of borrowing money.”

Buydowns offer a hedge against future rate spikes, the lender suggested: “While it might seem like you can only hope that interest rates are low, despite predicted trends and rate hikes, when you’re ready to obtain a loan, there’s actually something you can do to ensure your mortgage payments are more manageable in the future. By paying more money upfront, you can score a lower interest rate on your mortgage.”