The Commonwealth Bank has introduced a $1,250 refinance rebate and interest-only rate cuts in a note released to brokers as the spring property season gets under way, reported the Australian Financial Review.
The refinancing rebate can be accessed through CBA brokers, and is available for “new external refinance investment and owner-occupied principal and interest home loans.”
The CBA offer joins a number of refinancing incentives already in the market, including:
- St.George (along with subsidiaries BankSa and Bank of Melbourne) is currently offering $1,500 rebate for refinances over $150,000
- Police Bank is offering $1,000 cashback for owner-occupiers refinancing their home loan
- SCU is offering $500 cashback to anyone borrowing $150,000 or more
- NAB is offering refinancers 350,000 velocity points along with their mortgage
The number of refinancing loans for owner-occupied housing fell by 1.0% in July 2017, following a 1.2% fall in June, according to ABS statistics, but with APRA clamping down on new interest-only and investment lending, banks are now looking at existing mortgage customers to fill up their loan books.
According to Mozo home loan negotiator, Steve Jovcevski, “refinancers are a key part of the home loan market, and banks are keen to snap up borrowers looking to switch lenders.”
For borrowers, the key is knowing which refinance deal is the right one to choose.
“First off, you need to make sure you’re comparing apples with apples,” Jovcevski said.
“If you switch from a package home loan with all the bells and whistles to a basic loan with another lender, then sure, you’re going to get a lower interest rate, but you might miss out on other features that can save you money, like an offset account.”
When it comes to switching incentives like rebates or bonus offers, Jovcevski said borrowers should take into account what’s been advertised, but not be afraid to haggle for a deal as well.
“If there isn’t a rebate or bonus on offer, ask for one anyway. The lender will probably be keen to get your business, and may be willing to sweeten the deal,” he said.
But Jovcevski cautioned borrowers not to get swept up in short-lived cashback offers, and to consider the ongoing costs of the mortgage deal on offer.
“Don’t be swayed by a one-off cashback incentive if there’s a lower interest rate on offer that could save you five times as much in the long run,” he said.
For example, Mozo’s home loan comparison calculator shows that a borrower with $400,000 left to pay off their mortgage who refinances to a rate of 4.00% might pay $233,404 in interest over the next 25 years. If that same borrower scored a cheaper loan with a 3.80% rate instead, they might only pay $220,228 in interest - a much bigger saving than a one off cashback rebate is worth.
Ready to refinance your home loan and bag a better deal? Head over to our home loan refinance comparison table to check out some of the best deals around.