Over a dozen lenders are currently offering cash incentives to borrowers willing to switch over to a new lender, with Suncorp Bank, Reduce Home Loans and 86 400 the latest to join in.
Suncorp yesterday announced it’s offering up to $3,000 to refinancers, with an additional $1,000 available to essential service workers, such as doctors, nurses, teachers and police officers.
Three of the big four – CBA, Westpac, and ANZ – have also gotten into the cashback action.
While it's not an unusual tactic to lure in new borrowers, banks are beginning to chase customers even more aggressively, according to Sally Tindall, research director at RateCity.com.au.
“Cashback specials are nothing new. They’ve been used for years as a clever marketing tool to grab people’s attention. What has changed is the banks are starting to offer cashback on loans that also have competitive rates,” she said.
However, RateCity.com.au research showed that only someone who refinances every couple of years to a competitively priced loan could potentially come out on top by taking up a cashback special.
“Over the long term, it’s a completely different story. A low rate is almost certainly going to trump a one-off perk over 10 or 20 years – often by tens of thousands of dollars,” said Tindall.
“While the promise of cold hard cash is hugely attractive for anyone juggling the bills, people who put the money back into their mortgage will see even bigger savings as it will reduce their interest charges every single day.
“[But] it’s great to see Suncorp giving some extra cash to new customers who work on the frontline as a thank you for their service over this challenging time,” she added.
The bank’s tiered offer is available on owner occupied and investor loans with both principal and interest or interest only repayments for new refinancers who apply before 10 July 2020 and settle by 10 November 2020.