Two of the big four banks will scrap a cashback offer for mortgage holders who refinance with them.
Commonwealth Bank of Australia and NAB were offering a $2000 cashback “refinancing bonus” to lure in new customers.
NAB’s deal now requires people to apply by June 30, and draw down by September 30, while CBA’s deal now has a cut off date of May 31, with the loan to be funded by September 30.
While NAB has no official statement on the matter, it’s no secret the bank’s bosses aren’t the biggest fans of cashback offers.
NAB CEO Ross McEwan on May 4 said in a competitive market, some businesses felt they need cashbacks in order to get more business.
“I‘d rather be competing on a service delivery,” said Mr McEwan.
“You’ve got as high as $4000, $3500 … so that changes around in the marketplace pretty much on a daily, weekly basis … but I think cashbacks look like they’ve been coming down over last six to 12 months, which is probably a good thing.”
NAB’s group executive of personal banking Rachel Slade put it even more bluntly at the Australian Financial Review Banking Summit on March 28: “I hate cashbacks.”
“I look forward to the day where they don’t exist in the market,” Ms Slade said.
“We do try to have that conversation with the customer to explain how they might think about [cashbacks] in terms of the life of their loan.”
Meanwhile, a CBA spokesperson said the bank will continue to support “hundreds of thousands of Australians to achieve their home ownership and investment dreams.”
“Now, in response to customer, broker, and lender feedback that in the current economic environment, customers are focused on value, simplicity and certainty, CBA will no longer offer cashback payments on new applications for home loan products from 1 June 2023,” the spokesperson said.
Home loan comparison website Ratecity.com.au research director Sally Tindall said cashback deals have become a “hot potato” for the banks.
“Time will tell if Westpac and ANZ hold on to their cashback deals, but at this stage, the writing appears to be half-written on the wall,” said Ms Tindall.
“However, if either big bank wants to have a decent stab at pinching new customers, keeping these deals alive would help bring new business in.
“Borrowers looking for a sugar hit from a cashback deal with CBA and NAB will have a matter of weeks to get their refinancing paperwork. However, customers may well be better off shopping around.
“There are currently 29 lenders offering cashback deals, however, this number could drop significantly in the next couple of months if more lenders decide to follow in CBA and NAB’s wake,” she said.
The Reserve Bank board in May made the shock decision to raise the official cash rate 25 basis points to 3.85 per cent, after a pause in April.