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While a number of providers are continuing to use cashbacks as an incentive for borrowers looking to refinance, nearly one-third of lenders have dumped the idea, new data has revealed.
During the earlier part of the year, banks vigorously competed for a share of the refinancing surge by extending cashback incentives and competitive interest rates, aiming to lure borrowers away from their current lenders.
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However, this trend is decelerating, as indicated by Peter White, managing director of the Finance Brokers Association of Australia.
As of now, only 12 lenders are offering cashback offers, which is a decrease of almost one-third from the 35 present in March 2023, according to figures from RateCity.
Mr White further noted that for those lenders still offering cashbacks, these incentives “are not having the impact they used to.”
“There are better deals elsewhere that are in the borrower’s best interests,” Mr White said.
Research director at RateCity.com.au, Sally Tindall, said customers can’t expect them to last forever.
“Households looking for long-term relief are likely to be better off looking for an ultra-low rate and haggling with their new bank to waive any associated fees,” Ms Tindall said.
According to the Mortgage and Finance Association of Australia (MFAA) 95 per cent of brokers surveyed witnessed new clients using the channel for refinancing for the first time, indicating that borrowers continue to search for the best deals.
It comes as borrowers face hundreds, and in many cases thousands, of dollars extra a month in repayments, since the Reserve Bank of Australia (RBA) hiked the cash rate to above 4 per cent.
ANZ halves cashback offers
Among the “big four” banks, ANZ is the only banks still offering a cashback deal to refinancers.
However, the bank has chosen to reduce the value of this incentive by half, starting from 26 August 2023.
The offer will reduce from $4,000 to $2,000 on eligible loans over $250,000 with a deposit of 20 per cent or more. Loans with less than a 20 per cent deposit will no longer be eligible for cashback.
An ANZ spokesperson said: “ANZ has decided to change the offer having regard to a range of factors, including business performance, cost of campaigns, financial returns, and competitive pressures.”
ANZ has joined Bank of Melbourne and BankSA in halving its offer from $4,000 to $2,000.
RateCity data showed the highest cashback offer available for refinancing stays unchanged from Reduce Home Loans at $10,000; however, this amount is only for loans of over $2 million and not available on the lender’s lowest rate.
[Related: The cashback clawback conundrum]
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