Australian banks are throwing huge amounts of money at customers right now as the COVID recession bites. It is the one that offers the best deals.
Banks desperate to attract new customers are throwing money at homeowners in an attempt to get them to refinance their mortgage.
Many financial lenders offer thousands of dollars through cash back incentives to convince customers looking for a better deal on their home loan.
A flurry of refinancing activity has occurred over the past six months as existing borrowers seek to capitalize on cheap interest rates.
According to the Australian Bureau of Statistics, 113,000 people in the four months to July switched lenders through refinancing.
RateCity research director Sally Tindall said banks target refinancers because they are often seen as a more stable borrower.
“People who are able to refinance typically have some equity in their home, a stable job, and a good track record of paying down their debt, which is important in this market,” she said.
Twenty-two lenders across Australia are advertising repayment offers of up to $4,000 for new loans and refinances.
Ms Tindall said a continued low rate was a better long-term offer than an upfront cash incentive, but noted some banks offered cash offers in combination with a competitive rate.
“A low rate will almost certainly beat out a one-time benefit, typically tens of thousands of dollars,” she said.
“A number of banks offering these special sign-up offers are now offering quite competitive rates, which makes these offers more profitable than they were before.”
Commonwealth Bank, Westpac and NAB will pay $2,000 to new customers, while ANZ is prepared to pay $3,000 for refinancing, if the loan is initiated through a bank-affiliated broker.
Suncorp says it will offer frontline COVID-19 workers up to $4,000 if they decide to refinance.
Bank of Melbourne and St George are offering up to $3,000 via cashback.
Virgin Money, Police Bank and Reduce Home Loans offer repayment offers for new home loan commitments.
Ms Tindall said banks needed the business to keep loan books afloat while the coronavirus recession dampened normal buying activity.
“As a result, banks are fighting hard for people’s business, not just on rates, but in many cases on benefits,” she said.
RateCity said potential refinancing customers should consider all options to determine if a repayment agreement is in their best interest.