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Earlier this year, banks vigorously competed for a portion of the refinancing surge by offering cashback incentives, with the goal of enticing borrowers away from their current lenders, as refinances surged.
As borrowers continue to confront additional monthly repayments, often totalling hundreds or even thousands of dollars, due to the Reserve Bank of Australia (RBA) raising the cash rate above 4 per cent, refinances remain a threat for many lenders.
However, as competition eases, banks have responded by reducing cashback deals.
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.
Among the big four banks, ANZ stands as the only major bank that persists in offering cashback deals; however, it will be halving its incentive 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.
Research director at RateCity.com.au, Sally Tindall, said: “ANZ is still on the hunt for new customers, but in a marketplace where cashback sweeteners are dropping like flies, there’s no need to splash quite as much cash.
“ANZ’s rates aren’t the most competitive in the market, but some customers will still be drawn to an offer of $2,000 in cold hard cash.”
Ms Tindall added that customers should not anticipate cashback offers to persist indefinitely.
She suggested: “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.”
Managing director of the Finance Brokers Association of Australia, Peter White, added 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.
[Related: Refinancing reaches record high:ABS]
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