The surge in refinancing as borrowers attempt to combat the Reserve Bank of Australia’s (RBA) hiking cycle is putting pressure on lenders, with cashback offers being slashed.
According to RateCity, ING is the latest lender to announce it will end its $3000 cashback for refinancers on June 30.
The move follows a host of other lenders, including three out of the majors, who are cutting their cashback offers.
CBA’s cashback offer ends on June 1, while NAB and Westpac’s cashback deals wrap up on June 30.
ANZ is the only big four bank that has not cut its cashback deal.
RateCity.com.au Research Director, Sally Tindall, said lenders had been forced to tighten their belts.
“Cashback deals are dropping like flies with ING the latest lender to say ‘adios’ to this contentious perk,” Ms Tindall said.
“The current market churn is putting pressure on the bank’s profit margins.
“This is a collective call for calm from some of the nation’s biggest lenders.”
According to RateCity, there are currently 30 lenders still offering a cashback incentive to new home loan customers.
However, CBA, Bankwest, NAB, Westpac and ING have announced they are ending their cashback programs, taking the number down to 25 once these decisions take effect.
The highest cashback offer is from Reduce Home Loans at $10,000, however, this is only for loans of more than $2 million and it is not available on the lender’s lowest rate.
Ms Tindall said she expects more lenders to follow suit and cut their cashback offers going forward.
“ANZ is the only big four bank still holding on to its cashback offer, but you’d have to think its days are numbered,” she said.
“The bank has said it intends to stay at the forefront of the refinancing fight, but it’s a fight ANZ may eventually have to concede to profit margin pressures.
Ms Tindall said the steam might be coming out of the market at the top end of town, however, there are plenty of smaller lenders that still have sizeable cashback offers on the table.
“Borrowers intending to refinance have not missed the boat, however, they may need to look beyond Australia’s largest banks if they want the most competitive deals,” she said.
“The big banks might want the churn to stop, but borrowers do not have to dance to the beat of their drum. If Australians keep refinancing to better deals, the big banks will have no alternative but to chase them down.”
