Borrow
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.
RELATED ARTICLES
About the author
About the author
Loans
Mortgage stress is easing — but the credit cycle’s next winners will be data‑led
New Roy Morgan data shows the share of borrowers at risk has fallen to the lowest point since early 2023. That’s a welcome inflection after two years of rate rises—but the absolute number of at‑risk ...Read more
Loans
Beyond the mortgage: SME lending is where growth, margin and loyalty are shifting
SME credit is moving from branch desks to APIs, from collateral to cashflow, and from monoline lenders to embedded platforms. For banks, fintechs and brokers, this is not a side-bet—it’s where ...Read more
Loans
Debunking credit myths leads to big wins with transparent hardship design
New research from Arca’s CreditSmart initiative surfaces a stubborn problem: Australians under financial strain are avoiding hardship support because they fear lasting damage to their creditRead more
Loans
No-deposit home loans in Australia: The growth gambit that tests risk discipline
A new no-deposit mortgage has landed in Australia, promising to crack the hardest nut in housing—fronting a deposit—while raising old questions about risk and capital. For lenders, the product doubles ...Read more
Loans
Rate relief ignites a mortgage scramble — and a technology arms race
Australia’s rate easing has flipped mortgage demand from ‘defend and retain’ to ‘originate and grow’. Refinance waves and a rekindled purchase market are colliding with digitisation, broker dominance ...Read more
Loans
Trust is the moat: How brokers can win in an AI-accelerated, commoditised mortgage market
In an evolving mortgage landscape where algorithms are levelling the playing field, Australian mortgage brokers are finding that trust, rather than price or speed, is becoming their most valuable ...Read more
Loans
CreditSmart revolutionises hardship support and lenders risk missing out
Australians under cost‑of‑living pressure are sidestepping hardship help because they fear a permanent stain on their credit file. Arca’s CreditSmart initiative has thrust this misconception into the ...Read more
Loans
Australia’s 40‑year mortgage moment: affordability optics, lifetime cost, and the new risk calculus
Forty‑year home loans are shifting from niche to feature in Australia, led by challenger banks and mutuals courting first‑home buyers. The headline promise—lower monthly repayments—masks a material ...Read more
Loans
Mortgage stress is easing — but the credit cycle’s next winners will be data‑led
New Roy Morgan data shows the share of borrowers at risk has fallen to the lowest point since early 2023. That’s a welcome inflection after two years of rate rises—but the absolute number of at‑risk ...Read more
Loans
Beyond the mortgage: SME lending is where growth, margin and loyalty are shifting
SME credit is moving from branch desks to APIs, from collateral to cashflow, and from monoline lenders to embedded platforms. For banks, fintechs and brokers, this is not a side-bet—it’s where ...Read more
Loans
Debunking credit myths leads to big wins with transparent hardship design
New research from Arca’s CreditSmart initiative surfaces a stubborn problem: Australians under financial strain are avoiding hardship support because they fear lasting damage to their creditRead more
Loans
No-deposit home loans in Australia: The growth gambit that tests risk discipline
A new no-deposit mortgage has landed in Australia, promising to crack the hardest nut in housing—fronting a deposit—while raising old questions about risk and capital. For lenders, the product doubles ...Read more
Loans
Rate relief ignites a mortgage scramble — and a technology arms race
Australia’s rate easing has flipped mortgage demand from ‘defend and retain’ to ‘originate and grow’. Refinance waves and a rekindled purchase market are colliding with digitisation, broker dominance ...Read more
Loans
Trust is the moat: How brokers can win in an AI-accelerated, commoditised mortgage market
In an evolving mortgage landscape where algorithms are levelling the playing field, Australian mortgage brokers are finding that trust, rather than price or speed, is becoming their most valuable ...Read more
Loans
CreditSmart revolutionises hardship support and lenders risk missing out
Australians under cost‑of‑living pressure are sidestepping hardship help because they fear a permanent stain on their credit file. Arca’s CreditSmart initiative has thrust this misconception into the ...Read more
Loans
Australia’s 40‑year mortgage moment: affordability optics, lifetime cost, and the new risk calculus
Forty‑year home loans are shifting from niche to feature in Australia, led by challenger banks and mutuals courting first‑home buyers. The headline promise—lower monthly repayments—masks a material ...Read more
