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Big bank cashback offers trapping new borrowers
Despite offering investors up to $2,000 cashback on new home loans, big bank schemes to lure customers are actually costing these individuals nearly $40,000 by the end of their loan’s life.
Big bank cashback offers trapping new borrowers
Despite offering investors up to $2,000 cashback on new home loans, big bank schemes to lure customers are actually costing these individuals nearly $40,000 by the end of their loan’s life.
The analysis, from comparison site Mozo, has found seven $2,000 cashback offers in the market from lenders including Westpac, St.George, CommBank and NAB, but for loans with interest rates that are up to 64 basis points higher than their competitors.
According to Mozo, this means that when the banks’ $2,000 cashback offers are factored in to monthly repayments, any benefit would disappear in the first 18 months on a $300,000 loan.
The savings provided by the cashback offer on a $1,000,000 loan would dry up just six months in.
Director of Mozo Kirsty Lamont has used the analysis as a warning to investors not to be fooled by cashback offers.
“Don’t believe the hype when it comes to home loan cashback offers.”
She noted that the best option “is always to compare what’s on offer and go with the most competitive rate”.
Explaining that even the cheapest options available from the traditional banks are still 31 basis points higher than online banks, the director indicated that it’s in effect, meaning consumers pay more.
“When it comes to variable interest rates, the big banks are still a long way off being your best option,” Ms Lamont reiterated.
“Home loans are a long-term commitment, and if you set and forget your loan after banking a cashback offer, you could be trapping yourself with a poor interest rate and higher monthly repayments,” she concluded.
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