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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Just because refinancing saves the home buyer money doesn’t mean it loses any banks any money.
The bank that issues the new mortgage obviously makes a profit or else they wouldn’t be offering that rate.
The bank that held the original mortgage is a little more complicated. They get paid back ahead of schedule. You’d think they might be angry about that because they lose out on interest payments (and in rare cases they are, but government rules have generally shut down any repayment restrictions/penalties they might try to impose), but they generally prefer to have money now than promises of money in the future. They can just turn around and lend that money to someone else.
So how can everyone win? Interest rates fell. This reflects economic conditions where it’s easy to borrow money (often because the central bank is offering low rates to banks). Economics is often NOT a zero-sum game. If something becomes easier to produce (which is kind of abstract in the case of a loan, but just roll with it), there’s usually a way for everyone to win.
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