It might not feel like it 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 to entice borrowers to switch over.
One of the 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 or to certain borrowers.
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.
Cashback Refinance Deals available in March
These are all the Australian lenders offering cashback for refinancing at the time of writing:
|
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. |
|
Credit Union SA |
$2,000 |
Refinancing Owner Occupier (P&I) and Investment home loans with a maximum LVR of 80% and a minimum balance of $300,000. Offer is exclusive to current or retired employees of the South Australian Education Community, students carrying out studies in education, or their eligible immediate family member |
|
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 18 October 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 15th June 2024 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. |
|
Regional Australia Bank |
$2,000 for loans $250,000-$499,999; $3,000 for loans between $500,000 and $750,000, $4,000 for loans $750k+ |
For customers refinancing an Owner Occupied (P&I) or Investment home loan. Applications must be in by 30 June and funded by 30 September. |
|
BankVic |
$3,000 for loans of >$350,000 for police and emergency service workers, $2,000 for loans above $200,000 (healthcare workers) |
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 16th November 2024 and 18 February 2025. Loans must be funded by 30 April 2025. |
|
Tiimely |
$2,000 for loans >$500,000 |
Available exclusively for borrowers who refinance to the two year fixed loan, owner occupier or investor |
Find more information on the latest home loan cashback offers:
| 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 | Row Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.09% p.a. | $3,011 | Principal & Interest | Variable | $null | $null | 70% | ||||||||||||||
5.79% p.a. | 5.82% p.a. | $2,931 | Principal & Interest | Variable | $0 | $799 | 70% | ||||||||||||||
5.84% p.a. | 5.85% p.a. | $2,947 | Principal & Interest | Variable | $0 | $180 | 90% | ||||||||||||||
5.84% p.a. | 5.88% p.a. | $2,947 | Principal & Interest | Variable | $0 | $0 | 80% | ||||||||||||||
5.84% p.a. | 6.35% p.a. | $2,947 | Principal & Interest | Fixed | $395 | $250 | 60% | ||||||||||||||
6.19% p.a. | 6.19% p.a. | $3,059 | Principal & Interest | Variable | $0 | $160 | 70% |
Are cashback refinancing 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. These costs may eat into or even cancel out the cashback benefit.
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.
Let's look at a scenario to see how this plays out in real numbers.
Example
Imagine you have $500,000 remaining on your home loan and are considering refinancing from Lender A to Lender B for a $3,000 cashback offer.
Loan A: 6.00% p.a. interest rate
Loan B: 6.50% p.a. interest rate
Over 20 years, that extra interest cost would add up to $34,970 - wiping out the $3,000 cashback multiple times over.
Now, suppose you qualify for a third option - Loan C at 5.50% p.a.
Refinancing to Loan C could save you more than $150 per month, meaning you'd recoup $3,000 in around a year and a half, and continue saving for years to come.
And, if one loan comes with perks like an offset account or redraw, the potential savings that could result may also outweigh the cashback amount. You should balance any and all refinancing or opportunity costs against the money you'll receive via a cashback offer to work out whether you end up ahead in the long run.
Ultimately, securing a low rate for the long term is often a smarter move than chasing a short-term cashback boost. If you're in the market for a lower-cost home loan, check out some of these leading rates:
| 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 | Row Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.79% p.a. | 5.83% p.a. | $2,931 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | |||||||||||
5.84% p.a. | 5.86% p.a. | $2,947 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure | |||||||||||
5.74% p.a. | 5.65% p.a. | $2,915 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure |
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Collections: Home Loan Basics Guides & Articles Refinance home loans
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