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Westpac joins CBA and NAB in dumping cashback, hiking rates

Westpac is ending its $3,500 cashback deal and lifting rates for new customers.

Customers standing in front of Westpac branch and ATM.
Westpac is the latest bank to dump its cashback offer for refinancers and lift rates for new customers. (Source: Getty)

The home loan competition is starting to cool down, with Westpac joining Commonwealth Bank and NAB in dumping its cashback offers for refinancers and hiking rates for new customers.

Westpac has announced it will be ending its $3,500 cashback for refinancers on June 30. Its subsidiaries St.George, Bank of Melbourne, BankSA and RAMS will continue their cashback offers at this stage.

The major bank will also increase its basic home loan rate by 0.10 per cent for new customers. This will see rates increase to 5.99 per cent for borrowers with a deposit of less than 20 per cent, with an additional 0.40 per cent added after two years.

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Since March 1, Westpac has increased the interest rate for new customers taking out its basic loan by 0.70 per cent. It’s a similar story for the other big banks, according to RateCity, with CBA and NAB increasing rates by 0.75 per cent over the same period, and ANZ by 0.70 per cent.

This is more than the Reserve Bank’s official cash rate hikes, which have seen existing customer rates increase by 0.50 per cent.

“The big banks are falling over themselves to see who can flee the scene the fastest. They’re done with chasing new customers, even if that means growing their home loan books at a slower pace,” RateCity research director Sally Tindall said.

“The rising cost of funding has put pressure on their profit margins. The big banks want the churn in the market to end and they’re doing everything in their power to curb it.”

Cashback axed

When it comes to cashback, ANZ is the last of the big banks standing offering up to $4,000 cashback for refinancers and $3,000 for first-time buyers.

CBA will be getting rid of its $2,000 cashback offer on May 31, while NAB is ending its $2,000 cashback offer on June 30.

“ANZ has said it’s willing to stay in the fight for new business. If it can keep its competitive edge, it’s likely to attract some customers that might have otherwise gone to its big bank rivals,” Tindall said.

“Borrowers who are yet to refinance should know it is not game over. There are still plenty of lenders willing to offer sharp rates to people looking to switch. In some cases they’ll even throw in cold hard cash.”

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