Key Facts

  • The increasing home loan interest rates have some borrowers turning to competitor banks for cash when it’s time to refix.
  • Most banks continue to offer significant cashback deals as an incentive for attracting borrowers; 0.7% to 0.9% of a loan amount is typical, up to a certain level.
  • The cashback option is not available for existing loans shifting from one house to another but is worth considering for those needing a new loan or nearing the end of a fixed period.
  • Banks like ANZ offer cash contributions designed to cover costs like solicitor or valuation fees. These are conditional on the borrower keeping their home loan with the bank for at least three years.
  • Banks such as Westpac and Kiwibank do not have specific publicised cashback offers, but they determine offers on a case-by-case basis.
  • Reserve Bank data reveals that in September, 1892 borrowers switched to another provider, a decrease from August but an increase from September the previous year.

Article Summary

With home loan interest rates on the rise, many borrowers are considering switching to competitor banks offering significant cashback deals when their loan term is due for refixing. Presently, cashback deals ranging from 0.7% to 0.9% of a loan are standard, though these are not relevant for borrowers substituting loan security from one house to another. Those thinking of getting a new loan or nearing the end of a fixed loan period could find this beneficial.

As Edge Mortgages’ director, Glen McLeod, explains, these cashback offers might be smaller than before, but they can still amount to significant sums. In some cases, these can be substantial enough to offset slightly higher interest rates. However, borrowers are advised to consider their financial needs and circumstances before making a decision.

ANZ, for instance, provides cash contributions meant to offset costs such as solicitor or valuation fees. This is conditional upon the borrower maintaining their home loan with the bank for at least three years. Other banks, such as Kiwibank and Westpac, while they don’t advertise specific cashback offers, take on a case-by-case approach when dealing with customers.

According to the Reserve Bank, the number of borrowers changing providers slightly dipped in September, although the year-on-year figures showed an increase. This trend underscores the strategic significance of cashbacks as a tool to retain and attract customers in the competitive home loan market.

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