Commonwealth Bank is getting rid of its $2,000 cashback offer for mortgage refinancers from June 1, in a sign the home loan market is becoming too hot to handle.
A record $21.22 billion worth of loans were refinanced in March, according to the latest ABS figures, while $206.86 billion have been refinanced since the rate hikes started in May last year.
RateCity research director Sally Tindall said cashback deals had become a “hot potato” for the banks, with CBA the first of the Big Four to drop from them this year.
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“The big banks have been at the centre of the refinancing storm over the past 12 months, throwing down competitive new customer discounts and cold hard cash to tempt borrowers to switch. Now they’re looking to take shelter from it,” Tindall said.
Over the past two-and-a-half months, CBA and its big bank rivals have been hiking interest rates for new customers, on top of the Reserve Bank’s rate rises.
Tindall said today’s move meant CBA had taken yet another step away from the contest for new business.
“Refinancers are on the hunt for relief from the rate hikes. CBA’s decision to walk back part of its new customer discounts, and now its cashback, is likely to see it lose new business to competitors.”
RateCity analysis found there were currently 29 lenders offering cashback deals, including the Big Four banks, with the majority for refinancers only. This number is down from the record high of 35 lenders in March this year.
Westpac currently offers $3,500 for refinancers, NAB offers $2,000 for refinancers, and ANZ offers up to $4,000 for refinancers and $3,000 for first-home buyers.
The highest cashback is $10,000 from Reduce Home Loans, but this is available for a loan size of $2 million or more and is not available on the lender’s lowest rate.