Why would a bank offer refinancing at a lower interest? Is any money saved at all, or is it just paid on a different timeline?
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Former banker here,
Banks aren’t about making money. They’re about managing risk. (yes, they make ungodly amounts of money, but they’d rather mitigate risk on the money they have than make small percentages higher on riskier liabilities).
A lot of work I did was to refinance mortgages to bring in debt that’s riskier. In Canada, in the last 20 years, there’s nothing safer than property values. I’d rather take in your boat loan, your credit card debts ( you wouldn’t believe how much credit card debt is out there ) your kid’s student loans, and put it all on your house.
This is only one example, but there are tonnes of other reasons why they’re not necessarily losing money to refinance your debt for you.
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