In the world for credit and mortgages, lowballing refers to the ethically-questionable practice of loan originators in quoting low or generic prices which they have absolutely no intention of honoring.

Such marketing tactics are used to draw in prospects to apply for home loans. After which, every reason (such as unfavorable credit scores) is used to justify why the customer is not eligible for the low interest rates.

Thereby having to pay much higher interest.

In recent years, the LIBOR scandal was said to have arised from lenders lowballing their submissions to keep the index rate artificially low.

This enabled lenders to borrow from each other at low interest rates.

On top of that, borrowers were able to obtain larger loans than they should as the variables used to calculate debt ratios in standard underwriting made loans more affordable. This set borrowers up for a rude awakening when interest rates eventually correct itself. Leaving them vulnerable to defaults.

In general use, low-balling basically means to make very low offers to buy compared to market value or asking price of an item.

For example in real estate, investors who offer prices way lower than what a seller is asking for is said to be a lowballer. The lowball offer is usually made when buyers try their luck, or to signal to sellers there is no chance that a deal can be made with their asking price.