Banks desperate to attract new customers are throwing cash at homeowners in an attempt to lure them into refinancing their mortgage.
A slew of financial lenders are offering thousands of dollars through cashback incentives to win over customers looking for better deal on their home loan.
A flurry of refinancing activity has occurred in the past six months, as existing borrowers seek to capitalise on cheap interest rates.
According to the Australian Bureau of Statistics, 113,000 people in the four months to July have changed lenders through refinancing.
RateCity research director Sally Tindall said banks were targeting refinancers as they were often perceived as a more stable borrower.
“People in a position to refinance typically have a bit of equity in their home, a steady job and a good track record of paying down their debt, which in this market is important,” she said.
Twenty two lenders across Australia are advertising cashback deals of up to $4000 for both new loans and refinances.
Ms Tindall said an ongoing low rate was a better deal in the long run than an upfront cash incentive, but did note some banks were offering cash deals in combination with a competitive rate.
“A low rate is almost certainly going to beat a one-off perk, usually by tens of thousands of dollars,” she said.
“A number of banks offering these sign-up specials now have fairly competitive rates as well, making these deals more cost effective than they used to be.”
Commonwealth Bank, Westpac and NAB will dish out $2000 to new customers, while ANZ is prepared to hand out $3000 for refinances, if the loan is committed through a broker affiliated with the bank.
Suncorp says it will offer frontline COVID-19 workers up to $4000 if they decide to refinance.
Bank of Melbourne and St George are offering up to $3000 via cashbacks.
Virgin Money, Police Bank and Reduce Home Loans are offering cashback deals for new home loan commitments.
Ms Tindall said banks needed this business to keep loan books afloat while the coronavirus recession dampened normal buying activity.
“As a result, the banks are fighting hard for people’s business, not only on rate but in many cases, on perks,” she said.
RateCity said prospective refinance customers should look at all options to determine whether a cashback deal was in their best interest.
Originally published as Banks throwing cash at customers