It can be hard to remember if you’re a hopeful home buyer banging your head against the Household Expenditure Measure or the serviceability buffer, but lenders really do want your business.
Introductory rates, offset accounts, and low fees are some of the many methods lenders use to entice borrowers to switch over.
One of the most popular (and controversial) alternatives are cashback offers for refinancing.
What are home loan cashback offers?
As you can probably gather from the name, a cashback offer means you receive a cash bonus from a lender in return for refinancing your home loan to it.
Typically amounting to a few thousand dollars, the cashback handed back can go straight towards paying off the home loan or deposited into an account once the loan is switched over.
There are normally conditions attached, like a minimum loan size, or the cashback might only be available for certain products.
Why cashback offers are controversial
Cashback offers used to be much more prevalent in Australia. The three biggest banks in the nation, CommBank, Westpac and NAB, all had cash incentives to switch over until 2023, when one after another these offers were discontinued.
WLTH CEO Brodie Haupt told InfoChoice Group cashback offers are a lazy way for banks to gain customers.
“Major banks [were] failing to understand their unit economics around the cost of acquisition for a customer,” he told the Savings Tip Jar podcast.
“So rather than trying to generate and invest in education for their borrowers and customers, they look for retention.”
The majors winding back cashback offers also coincided with the impact of the RBA’s Term Funding Facility (TFF) wearing off. Announced in March 2020, the TFF was an attempt to stimulate the economy, offering banks loans at very low rates to be paid over three years. Roughly $200 billion of these loans is due to be repaid in 2024.
With the cash rate rising 125 bps throughout 2023, demand for refinancing was already strong, so some banks seemingly decided there was no need to keep hurting margins in exchange for customer acquisition.
Looking for a cash incentive to refinance? The table below features home loans with cashback offers available for borrowers who make the switch.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.99% p.a. | 6.04% p.a. | $2,995 | Principal & Interest | Variable | $null | $null | 70% | |||||||||||
6.04% p.a. | 6.07% p.a. | $3,011 | Principal & Interest | Variable | $0 | $799 | 70% | |||||||||||
6.04% p.a. | 6.05% p.a. | $3,011 | Principal & Interest | Variable | $0 | $180 | 90% | |||||||||||
5.99% p.a. | 6.03% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | |||||||||||
5.89% p.a. | 6.44% p.a. | $2,962 | Principal & Interest | Fixed | $395 | $250 | 60% | |||||||||||
6.59% p.a. | 6.59% p.a. | $3,190 | Principal & Interest | Variable | $0 | $160 | 70% |
Are refinance cashback offers always worth it?
If you’re a mortgage holder, it’s understandable that a cashback offer would catch your eye. It’s seemingly free money after all, for very little effort.
However, there’re a few things you’ll want to factor in before deciding whether refinancing for cash is worth it.
Refinancing in itself is not cost free. You'll likely need to pay fees to terminate your old loan and establish a new one, which need to be subtracted from the money you’ll receive from the cashback.
You also want to consider whether the loan you are switching to is worth it. Even taking the cashback into account, if you’re switching over to a higher rate, you could end up paying much more in interest over the course of the loan than the money you make from the cashback.
For example, imagine you have $500,000 remaining on your home loan. You’re weighing up refinancing from Lender A to Lender B because of a $3,000 cashback bonus, but Loan B has a rate of 6.50% p.a. and Loan A 6.00% p.a. Assuming there are 20 years remaining on the loan term, refinancing would mean paying $34,970 more in interest all up, dwarfing the cashback amount.
If one loan comes with perks like an offset account or redraw, the potential savings there could also outweigh the cashback amount. You should weigh up all of these costs against the money you’ll receive to work out whether you end up ahead in the long term.
Refinance Deals
As of September 2024, these are all the Australian lenders offering cashback for refinancing:
|
Bank / Lender |
Cashback Amount |
Terms and Conditions |
|---|---|---|
|
ANZ |
$2,000 |
Refinancing Owner Occupier Principal loans with P&I repayments and Residential Investment loans of $250,000 or more. Limit of one cashback within a 12-month period. Available until withdrawn. |
|
Greater Bank |
$2,000 for loans up to $499,999; $2,500 for loans above $500,000 |
Refinancing Owner Occupier (P&I) and Investment home loans with max LVR and minimum balance of $250,000. Commenced 1 June, available until further notice |
|
imb Bank |
$2,000 for loans between $500,000 and $750,000; $3,000 for loans up to $1 million; $4,000 for loans > $1 million |
Refinancing Owner Occupier (P&I) and Investment home loans with max LVR 80% and minimum balance of $500,000. Excludes budget home loan. Applications from 3 May 2024, must be settled within 90 days of applying |
|
ME Bank |
$3,000 for loans >$700,000 |
Refinancing Owner Occupier (P&I) and Investment loans with a max LVR of 80%. Not available for refinances from other BOQ Group banks. Apply from 8th September 2023 and settle within 120 days of the loan application date. |
|
Newcastle Permanent |
$2,000 for loans between $250,000 and $500,000; $3,000 for loans >$500,000 |
Refinancing Owner Occupier and Investment loans with a max LVR of 80%. Not available for refinances from other NGM Group lenders. Commenced 17 July 2024, available until further notice. |
|
Reduce Home Loans |
$2,000 for loans between $250,000 and $500,000; $3,000 for loans up to $750,000; $5,000 for loans up to $2 million; $10,000 for loans >$2 million |
Refinancing Owner Occupier (P&I) and Investment loans with a max LVR of 90% to a fixed rate home loan only. Not available for refinances from select lenders. Apply between 1st January 2024 and 4th October 2024. Loans must be approved by 31st October 2024 and funded by 31st December 2024. |
|
BankVic |
$2,000 for loans of >$200,000 |
Available to current police and emergency service workers refinancing Owner Occupier (P&I) and Investment loans with a max LVR of 80%. Not available for internal refinances. Apply between 14th August 2024 and 15th November 2024. Loans must be funded by 31st January 2025. |
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