BEND, ORE. (CNN/Money) – If you're shopping for a house or just getting around to refinancing, you probably won't be able to lock in rock-bottom interest rates.
But look at the bright side. Freebies.
We're not talking about toasters or calendars or even jelly-of-the-month clubs. This time around the lending industry is giving away gift cards to the tune of a couple thousand dollars and enough frequent flier miles to take the whole family to Hawaii.
"Whenever business slips a little, lenders trot this stuff out," said Keith Gumbinger, vice president for HSH Associates.
Indeed, after a record year for new loans and refinancing, mortgage bankers are now competing for fewer customers in 2004. According to the Mortgage Bankers Association of America's estimates, in fact, the number of mortgage originations will drop by more than half this year.
"The lending industry is doing what it can to get a piece of the shrinking pie," said Anthony Hsieh, CEO and founder of online mortgage lender HomeLoanCenter. "You're going to see more aggressive offers in the coming year."
Hsieh's company, for one, is using incentives to entice new business. During the holidays, HomeLoanCenter gave Amazon customers $300 gift certificates for financing or refinancing with them. Home equity loans were good for $200 to $100 gift certificates.
"We did a million-dollar loan for one gentleman who got four round trip tickets on that loan," said Hsieh. Alaska, Frontier and Hawaiian airlines' frequent fliers score 1,400 miles for every $10,000 they borrow from HomeLoanCenter.
LendingTree, an online marketplace "where lenders compete for your business," is also giving away big-ticket perks. Mortgage and refinance customers receive 1,250 miles good on Continental, Delta, Northwest, United or US Airways for every $10,000 they finance. Those who buy or sell their house with one of the LendingTree's real estate affiliates score 3,000 miles for every $10,000.
"If a customer sells, buys and finances a $200,000 home, the completed process results in 145,000 airline miles that the consumer will receive upon closing these transactions," said Mindy Neubauer, a spokeswoman for LendingTree.
Have your fill of miles? Then go for the gift card. Customers who buy or sell a home through LendingTree's real estate partners earn Home Depot and American Express gift cards worth up to $2,000 per transaction, as well as $100 bonus for using the site to find a mortgage.
It's not just the big companies handing out extras.
"Six years ago I gave $100 Home Depot gift certificates to clients who closed on a loan," said Vicki Van Horn, a mortgage broker in Northern California. "They didn't have gift cards back then."
Today, Van Horn holds a "sweepstakes" two to three times a year whereby clients have a shot at winning one month's mortgage payment. Last month she also started giving new clients a $200 donation to give to the local school of their choice.
Miles for your mortgage
Not surprisingly, frequent flier miles are one of the most common incentives. Mortgage and real estate companies have partnered with virtually every frequent flier program, with mileage rewards ranging from 1,000 to 3,000 points for every $10,000 bought, borrowed or sold.
But few lenders are advertising free miles to the general public.
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For the time being at least, they're promoting the programs directly to frequent flier members. In order to qualify for miles you must apply or already be a member of an airline's program and, in most cases, you must start the mortgage process through a Web site or phone number set up specifically for the program.
Alaskan, Continental, Delta and United frequent fliers, as well as Hilton Honors members, earn 1,300 miles for every $10,000 they borrow when they finance or refinance with Chase, Citibank, Washington Mutual or Wachovia.
For information, go to each of the airline's Web sites, and choose program partners then financial services. You can also go directly to Awards for Mortgage and Real Estate.
Between now and May 31, Nationwide is giving new mortgage and refinance customers 1,500 America West miles for every $10,000 they borrow. Customers must first sign up for America West's program and then apply via FlightFundMortgage.com.
As of June 2003, American Airlines frequent fliers earn 1,000 miles for every $10,000 they borrow from Wells Fargo.
Or, if you work for one of the hundreds of companies that belong to Wells Fargo's "Employee Mortgage Program" you may qualify for a hotel getaway and gifts ranging from down comforters to DVD players. (According to Wells Fargo, it's up to your company to tell you if you're eligible.)
Just don't let all these freebies get to your head.
They should be at the very bottom of your list of considerations, said Gumbinger. He recommends shopping at least a dozen lenders for the best rates, terms and fees. Only after you've narrowed your search down to two equally good offers should you go for the giveaway.
Even then, added Gumbinger, "it's a good idea to keep in mind that you rarely 'get something for nothing.'"
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