Westpac has announced it will be ending its $3,500 cashback offer on home loan refinances on 30 June, joining two other big banks this month who have scrapped large cash handouts to new customers.
Following moves from CBA and NAB to end their cashback offers on 31 May and 30 June respectively, cashbacks will be removed from Westpac loans at financial year’s end.
However according to RateCity.com.au, cashback offers from Westpac subsidiaries St.George Bank, Bank of Melbourne, BankSA and RAMS are yet to be cancelled.
Westpac has also hiked the rate on its basic home loan by 0.10 percentage points for new customers.
RateCity.com.au research director, Sally Tindall, said that Westpac was the latest big four bank to pull out of the race for new customers.
“Westpac has today announced it’s taking its cashback offer off the table, along with rate hikes for select new customers,” Tindall said. “As a result, new customers taking out a basic loan with Westpac will find they have to pay 0.20 percentage points more than someone who took out the exact same loan seven weeks ago.”
“The big banks are falling over themselves to see who can flee the scene the fastest. They’re done with chasing new customers, even if that means growing their home loan books at a slower pace.”
Big four bank current cashback offers for refinancers
Westpac increased rates for new customers for its Flexi First loan for the second time in the last seven weeks, in addition to the standard RBA hikes.
The lowest advertised variable rate for new customers taking out Westpac’s basic home loan has risen by 0.70 percentage points since 1 March 2023.
Tindall said the rising cost of funding had put pressure on bank profit margins.
“The big banks want the churn in the market to end and they’re doing everything in their power to curb it,” she said.
“While CBA, Westpac and NAB have each said the chase for new customers is unsustainable, they’re madly hoping the rest of the market will follow.
“When it comes to cashback, ANZ is the last big bank standing but the $4,000 question remains – for how long?
“ANZ has said it’s willing to stay in the fight for new business. If it can keep its competitive edge, it’s likely to attract some customers that might have otherwise gone to its big bank rivals.”
Tindall said that it was “not game over” for borrowers who had yet to refinance.
“There are still plenty of lenders willing to offer sharp rates to people looking to switch. In some cases they’ll even throw in cold hard cash,” she said.
Last week, Westpac announced it would lower the stress test on select refinance applications to help borrowers stuck in “mortgage prison”.