HOUSE LOANS: Banks scrap $2,000 cashback offer
Two of the four major banks are scrapping a cashback offer for mortgage holders who refinance with them.
Commonwealth Bank of Australia and NAB offered a $2,000 cash back “refinance bonus” to entice new customers.
NAB’s deal now requires people to apply before June 30 and withdraw by September 30, while CBA’s deal now has a close date of May 31, requiring the loan to be funded by September 30.
While NAB has no official statement on this, it’s no secret that the bank’s bosses aren’t the biggest fans of cashback offers.
NAB CEO Ross McEwan said on May 4 that some companies in a competitive market felt they needed cashbacks to get more business.
“I prefer to compete on service,” said Mr. McEwan.
“You have a whopping $4000, $3500…so that changes about daily, weekly in the market…but I think cashbacks look like they’ve been down for the last six to 12 months which is probably a good thing .”
Rachel Slade, personal banking group leader at NAB, put it even more bluntly at the Australian Financial Review Banking Summit on March 28: “I hate cashbacks.”
“I look forward to the day when they no longer exist on the market,” Ms Slade said.
“We do try to have that conversation with the customer to explain how they might feel about it [cashbacks] in terms of the term of their loan.”
Meanwhile, a CBA spokesman said the bank “will continue to support hundreds of thousands of Australians to achieve their home ownership and investment dreams”.
“In response to feedback from customers, brokers and lenders that customers are focused on value, simplicity and security in the current economic climate, CBA will no longer offer cashback payments for new applications for home loan products as of June 1, 2023.” said the spokesperson.
Sally Tindall, research director for home loan comparison Ratecity.com.au, said cashback deals have become a “hot potato” for the banks.
“Time will tell if Westpac and ANZ stick to their cashback deals, but at this stage the writing seems half written on the wall,” Ms Tindall said.
“But if one of the big banks wants to make a good effort to bring in new customers, then keeping these deals going would help bring in new customers.
“Borrowers looking for a sugar hit of a cash back deal with CBA and NAB have a few weeks to get their refinancing papers. However, customers are better off shopping around.
“There are currently 29 lenders offering cashback deals, but this number could drop significantly in the coming months if more lenders decide to follow in the wake of CBA and NAB,” she said.
The Reserve Bank board made the shocking decision in May to raise the official cash rate by 25 basis points to 3.85 percent, after a pause in April.