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A growing number of lenders have confirmed they will stop offering cashback to borrowers refinancing to them, with ING Australia and Suncorp Bank becoming the two latest lenders to pull their popular cashback deals from market.
Suncorp Bank has confirmed it will withdraw its $3,000 Cash Back Boost offer at the close of business this Friday (2 June 2023). Any eligible applications submitted by this date must settle by 28 September 2023 to receive the Cash Back Boost.
Troy Fedder, head of broker partnerships at Suncorp Bank, commented: “We are constantly reviewing our offerings to our brokers partners and customers to ensure we are providing leading products and services.
“We value the feedback of our customers and broker partners and will continue to offer them leading service in the home lending space with consistently fast turnaround times and innovative products and services that meet their needs.”
Similarly, ING Australia, which currently has a $3,000 offer to eligible customers refinancing their home loan to ING, will end its promotion on 30 June.
Glenn Gibson, ING Australia’s head of sales and distribution commented: “We’re announcing today that we will be ending our refinance cashback offer on 30 June.
“This is in response to changing market conditions, and also a result of feedback myself and team have received as part of our ongoing engagement with brokers.”
The two non-major banks have joined a growing list of lenders that have decided to compete on product, rather than cashback incentives, including:
- Commonwealth Bank of Australia $2,000 cashback — ends 31 May
- Bankwest $2,000 cashback — ends 31 May
- National Australia Bank $2,000 cashback — ends 30 June
- Westpac $3,500 cashback — ends 30 June
- St.George $4,000 cashback - ends 31 August
- BankSA $4,000 cashback — ends 31 August
- Bank of Melbourne $4,000 cashback — ends 31 August
The trend came as record levels of refinancing have resulted in strong competition among mortgage lenders, with major banks particularly benefiting from new business as a result of the offerings.
However, the high cashback offers and strong discounting have resulted in a squeeze on net interest margin, making the long-term viability of these cash incentives harder to justify.
CBA chief executive Matt Comyn has previously suggested that the strong competition for refinances has resulted in lenders writing loans below the cost of capital while NAB CEO Ross McEwan has previously said that there were loans “being written in the bank sub cost of capital”, which was “not a market [we’ve] chosen to grow in”.
Members of the mortgage broking industry have welcomed the move to remove cashbacks, after finding that the large dollar value incentives were encouraging more borrowers to refinance — sometimes against their longer-term best interests.
Cashbacks have also been fuelling a rise in loan book churn as borrowers chase the high-dollar cashback deals, in turn increasing the frequency of broker clawbacks. As such, members of the broking industry have been urging more lenders to remove their cashback offers.
[Related: Why are lenders removing cashbacks?]