Surprise reason banks are gifting Aussies $4,000

Lenders are offering enticing deals worth thousands of dollars to lure in refinancers currently sitting on the fence, according to new research by Finder.

The comparison site’s analysis revealed dozens of refinance deals have hit the market offering home loan cash back offers of up to $4,000.

According to Finder’s research, a $4,000 offer would effectively reduce the average variable rate of 6.28 per cent in the first year to 5.47 per cent on the average Australian loan of $641,143.

Finder’s consumer sentiment tracker shows one-in-eight mortgage holders have missed one or more home loan repayments in the past six months.

Head of research Graham Cooke said with no change in the official cash rate, lenders are seeking out non-interest rate bait to reel in new customers.

Lenders are making small offers that vastly change the variable rate on home loans. Picture: Getty

“We’ve seen the percentage of households struggling to pay their home loan at a record high over the last two years and it’s going to continue to climb," he said. "People are focused on their home loans, and how they can reduce payments, that’s why we’re seeing quite a lot of competition for those customers in the market right now."

He added that home loan refinancing numbers are expected to surge in coming months amid speculation of an interest rate drop.

More than $19 billion worth of national home loans were refinanced in July 2024 – the proportion of mortgagors moving to a different lender has dropped to just 59 per cent of all refinancing activity after peaking at 72 per cent in July 2023. This is expected to reverse in the coming months with attractive cash back deals flooding back onto the market.

“If we see the official cash rate drop, maybe towards the end of this year or early next year, that’s when the market will likely explode. I think a lot of these offers are there, ready to entice customers when rates do shift.”

With some lenders dishing up flyer points, waiving fees or reducing rates on packaged credit cards, the financial fishing is diverse.

Fefinancers could benefit from up to 100,000 frequent flyer points a year through Qantas Money. Picture: News Corp Australia

Qantas Money is gifting up to 100,000 frequent flyer points a year as well as holiday vouchers, while IMB is offering as much as $4,000 in tax-free cash.

“The behaviour of the banks in terms of dropping the rates on some of the fixed rate products indicates the banks are expecting a rate cut soon. It’s not a question of if, it’s a question of when.”

Flint mortgage broker and managing director Chris Bates said while the offers aren’t dominating the home loan landscape, there is a hint of change on the horizon.

“They’re starting to offer a little more, which makes sense because there’s now more confidence around where rates are going. Some banks are just wanting to get ahead of the curve and grow their loan books again,” he said.

“At this point there’s nothing super exciting or game changing on the table and it’s not like we’re seeing a mortgage war. But I don’t think that’s far away. As rates get cut, that’s when the competition war will come back. It’s just a matter of watch this space.”

This article was originally published on realestate.com.au and has been republished with permission.