Heritage launches cashback offer for FHBs

Heritage Bank has announced that it is offering $2,000 cashback for first home buyers (FHB) on eligible home loans with lender’s mortgage insurance (LMI).

Effective 1 October, the FHB cashback offer is available on a range of fixed rate and variable home loans, with features such as no monthly or redraw fees, free online redraw facility, optional offset account and the ability to make increased or lump sum payments.

It comes amid rising demand from the FHB market, with research showing that this was the most likely segment to purchase property in the next year. Analysts are expecting demand to continue to flow from FHBs, who are driven by potential property price falls, reduced investor activity, along with record-low interest rates and government grants.

Heritage Bank CEO Peter Lock said the level of FHB lending has started to rebound at Heritage Bank in the last few months, after declining in the period immediately after the coronavirus pandemic struck.

“Buying your first home is a huge financial commitment, made even tougher at the moment because of the impacts of COVID,” he said.

“The cashback offer provides a boost specifically for first home buyers requiring lender’s mortgage insurance and is available to both owner-occupiers and investors.”

The bank has joined a range of other lenders who have recently offered substantial cashback offers, but those offers from other lenders have particularly targeted the increasingly competitive refinance market. 

Some lenders have experienced a surge in applications following cashback offers, which affected turnaround times.

Commenting on this issue, Heritage Bank said it does not expect its offer to hinder turnaround times.

"With this being a niche and targeted offer, we are not anticipating this specific offer will have a material impact on Heritage’s service times," the bank told The Adviser.

"This niche offer will be in market for a limited time and coincides with the end of our major home loans campaign run over August/September. In addition, we have dedicated additional resources to application processing."

ANZ recently announced that it was extending deadlines for its refinance cashback offer, but the offer led to a spike in refinance applications earlier this year, which had a significant negative impact on its turnaround times for mortgage applications.

This led to a significant fall in satisfaction among brokers with ANZ, with Momentum Intelligence’s Broker Pulse research showing that the share of brokers sending mortgage applications to the bank fell by 11 percentage points in June.

However, the demand did help drive strong growth across its mortgage portfolio in 3Q2020.

ANZ CEO Shayne Elliott recently revealed that application levels burgeoned to $1.2 billion a day earlier this year, leading to a blowout in processing times.

Tasmania-based MyState Bank expanded its $2,000 cashback offer recently, making it available to all customers for all new, relevant applications Australia-wide.

But the bank also experienced lags in processing times recently, announcing that it would no longer be accepting new applications for the government’s First Home Loan Deposit Scheme from anyone outside of Tasmania.

[Related: Processing lags cost refinancers millions in savings]