CBA and NAB offer cashback deals to home loan customers
FINANCIAL institutions hungry for new business are wheeling out enticing cashback bonuses amid a softening property market and tougher lending restrictions.
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FINANCIAL institutions hungry for new business are wheeling out enticing cashback bonuses amid a softening property market and tougher lending restrictions.
Some of the nation’s biggest lenders including the Commonwealth Bank and National Australia Bank are offering cashback deals of up to $2000 to refinancers and new borrowers.
The property market has slowed with latest CoreLogic data showing capital city auction clearance rates fell from 64.5 per cent this time last year to just 50.2 per cent.
Analysis from financial services firm Canstar found customers can score cheaper deals elsewhere by snapping up a mortgage with a lower interest rate, saving themselves thousands of dollars over the loan term.
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Canstar figures found customers would save about $25,000 over the life of the loan if they opted for the cheapest deal of the market — Reduce Home Loans’ offer with a rate of just 3.44 per cent — instead of Commonwealth Bank’s cashback deal.
Canstar’s group executive of financial services Steve Mickenbecker said getting up to $2000 cashback often equates to only a small amount of total loan repayments.
“On a $300,000 loan over 30 years, $2000 covers only the first repayment and nothing much more than that,” he said.
“You now have 359 repayments to make before you can say you’ve paid off the loan.”
Canstar’s database found other lenders also offering cashback deals include Bankwest, Suncorp, St George, Bank of Melbourne and Bank SA and Newcastle Permanent.
The Reserve Bank of Australia has kept the cash rate on hold at 1.5 per cent where it has sat since August 2016.
The RBA board meets again on Tuesday and it’s expected they will keep the cash rate on hold again.
In recent months many banks have made out-of-cycle interest rate moves, pushing up borrowing costs for new and existing customers.
However there’s still plenty of interest rate deals below the four per cent mark.
Aussie Home Loans’ chief executive officer James Symond warned that cashback deals often just result in a “short term gain.”
“There might be long term pain if the rate, fees and other charges are not competitive and appropriate to the borrower’s needs and aspirations,” he said.
“The cashbacks and other short term incentives are just another factor in what is now a very competitive and complicated home loan market.”
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