Banks Compete for Borrowers with Generous Cashback Offers
The Reserve Bank's decision to keep interest rates on hold has sparked a competitive battle among lenders, with homeowners emerging as the ultimate beneficiaries. According to Finder.com.au's analysis, a dozen banks are currently offering substantial cashback incentives, ranging from $2,000 to $5,000, or up to 300,000 Qantas points, to those who switch lenders.
This cashback strategy is a direct response to the intense competition in the loan sector, as highlighted by Graham Cooke, Finder's head of consumer research. As the market becomes more competitive, banks are employing various tactics to attract borrowers and secure a larger share of the mortgage market.
Finder's home loans expert, Richard Whitten, explains that cashback offers are a way for lenders to differentiate themselves in a crowded market. With many loans offering similar interest rates and fees, cashback incentives provide an attractive incentive for refinancers and new borrowers.
Among the most generous cashback offers are from BankVic, which provides a $4,000 to $5,000 cashback for refinancers with an interest rate of 5.35%. IMB offers a cashback of $2,000 to $4,000 at a rate of 5.29%, while ME Bank provides $3,000 at a rate of 5.38%. Other lenders, including AMP, Greater Bank, Summerland Bank, Bank of Queensland, Credit Union SA, and Newcastle Permanent, are also offering cashback incentives ranging from $2,000 to $3,000.
However, it's important to note that cashback offers may not be the sole factor in choosing a lender. Aidan Hartley, director and broker at Owl Home Loans, emphasizes that the features of a loan, such as the ability to make extra repayments through an offset, are often more critical than the cashback amount or interest rate.
Additionally, the cashback strategy may be a temporary measure, as Whitten suggests. With the RBA's decision to hold the cash rate, lenders might focus on attracting new business through cashback offers, but the availability of these deals could diminish if further rate cuts are not anticipated.
