Lenders Bomb Mortgage Market With Cash Back
05:40, 27 Oct 2020
4 minutes to read
The number of lenders offering cashback offers has more than doubled since the start of the COVID-19 crisis, attracting more than 130,000 refinancers, new analysis has revealed.
According to an analysis by comparison site RateCity, the number of lenders offering repayment offers to refinancers has more than doubled in response to the economic fallout from the COVID-19 crisis.
Currently, a record 29 lenders in the mortgage market are offering cash back rewards of up to $ 4,000, up from just 12 lenders in February.
As a result, refinancing activity has increased, with the latest data from the Australian Bureau of Statistics (ABS) showing that 137,372 loans were refinanced in the five months from April to August.
RateCity’s research director, Sally Tindall, said the record increase in repayment offers was a reflection of the competitiveness of the mortgage market.
“The increase in refinancing is forcing banks to be more competitive than ever,” she said.
“Banks need to win new business, not lose it, and they throw large sums of money at anyone who wants to refinance, especially if they have a good history of paying down their debts and a stable job. “
However, RateCity’s analysis found that while lucrative in the short term, mortgage products with repayment offers can be expensive in the long term.
RateCity compared the special cashback offers of the Big Four banks and their subsidiaries to the lowest rate options in the market, finding that the cashback offers were “considerably more expensive” after five years.
But according to Ms. Tindall, lenders are increasingly offering promotions on their lower rate loans.
“While a low going rate usually outweighs a longer term special listing offer, if [a borrower] refinances regularly, and knows how to negotiate hard rates and fees, [they] could finish early in the first two years, ”she added.
Ms Tindall urged borrowers to carefully review a product’s terms and conditions before committing to the deal, making sure it is best suited to their circumstances.
[Related: Brokers increasingly writing loans with non-majors]
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