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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Banks don’t make money on rate generally. Almost all loans are sold to agencies like Fannie mae/Ginnie mae who sell them to investors. They do this to get the principal back. Then they are paid a fee to service the loan. This fee income is longer term revenue and if they can keep that from running off from refinancing elsewhere they keep the cash flow longer
The actual origination of the loan typically costs the bank money. It’s a business they hate but they have to do to provide expected services. Cheaper to buy the servicing from other local lenders and consolidate billions in loans each giving a small monthly cash flow.
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