A surprising twist in the mortgage market has homeowners buzzing! With interest rates on hold, banks are battling it out to attract borrowers with some seriously juicy deals.
The Reserve Bank's decision to keep rates steady this week left many homeowners feeling a bit deflated. But here's where it gets interesting: mortgage holders now have a unique opportunity to score some serious cash back.
Finder.com.au's analysis has revealed a full-blown cash war among lenders, and it's homeowners who stand to benefit. A dozen lenders are offering incredible cashbacks of up to $5000 or an equivalent in Qantas points for those willing to switch. And the best part? You can get these deals without compromising on loan terms or rates.
Graham Cooke, Finder's head of consumer research, explains that banks are throwing money at borrowers due to rising competition in the loan sector. Lenders are pulling out all the stops to grab a larger share of the mortgage market. But why are they doing this?
Here's the controversial part: Home loans are standardized products, and at the competitive end, many loans have similar interest rates and fees. So, banks are using cashbacks as a way to stand out and appeal to refinancers and new borrowers.
Among the most generous offers is BankVic's $4000-$5000 cashback for refinancers, with an interest rate of 5.35%. IMB and ME Bank are also in the game, offering $2000-$4000 and $3000 cashbacks, respectively. Other lenders, like AMP, Greater Bank, and Bank of Queensland, are joining the cashback frenzy, with deals ranging from $2000 to $3000.
But here's the catch: these deals may not last forever. Richard Whitten, Finder's home loans expert, warns that lenders are offering cashbacks to borrowers who fix their interest rates. This could be a strategic move by lenders, anticipating further rate drops and wanting to lock borrowers in at slightly higher rates today.
Most refinancers in recent months have been those accessing equity, not switching lenders to save. However, the RBA's decision to hold rates in November might change this dynamic. While we can expect lenders to continue using cashbacks to attract new business, there might be fewer such offers if rate cuts are off the table, which seems to be the case for now.
A Finder poll of economists predicts another rate cut between February and May next year, primarily due to labor market weaknesses. Aidan Hartley, director of Owl Home Loans, suggests that bank cashbacks could be a strategy to boost slow refinancing activity.
Most lenders have fully passed on this year's three rate cuts, leaving little incentive for homeowners to switch. Hartley adds that those considering cashback offers should prioritize loan features over short-term gains. The ability to make extra repayments, like through an offset, is crucial, followed by a competitive rate. Cashbacks should be seen as the icing on the cake.
So, are these cashback deals too good to be true? Will they spark a refinancing boom? What do you think? Share your thoughts in the comments below!
