More home loan lenders offering cashback deals, but are they worth it?

Australian notes and coins.

With so many lenders sharpening home loan rates, it’s easy to forget there’s a floor to how low they can go. Nowadays, many lenders are looking beyond pricing to attract customers, and cashback offers are among the most popular strategies.

These are one-off sums paid out to borrowers, usually in the range of $1,000 to $3,000, which can be used for any purpose including paying off your mortgage. 

Among lenders we track, 19 currently offer home loan cashback deals, up from seven in 2019. 

But it’s not just the popularity of cashback deals that has increased. In the past two years, the average amount on offer has also climbed from $1,671 to $2,541.

At the time of writing, HSBC offers the most generous cashback deal at $3,288, available on its 2.19% p.a. (2.20% p.a. comparison rate*) Home Value Loan for borrowers with a deposit of at least 30%.

Among fixed rate home loans, ING’s Fixed Rate Loan with Orange Advantage, which offers rates as low as 1.84% p.a. (3.73% p.a. comparison rate*) on 2-year terms, hopes to attract refinancers with a welcome bonus of $3,000.

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While such offers might be tempting, Mozo spokesperson Tom Godfrey reminds borrowers not to put a quick cash boost ahead of long-term savings.

“Lenders offer cashback incentives for various reasons and it’s not always to get you into their best value loan,” he said.

“It’s worth remembering that one of the best ways to improve your cash position is tapping into the best rate you can find and avoiding higher monthly repayments.”

He also warns against switching across lenders just to take advantage of a sign-up bonus, a move which might prove much more costly and time intensive than anticipated.

"If you’re just keen to get some ‘quick cash’ and then switch again to a better interest rate with another lender, you need to ensure you factor in any fees such as establishment and discharge fees which could reduce the potential benefit you might receive,” he said.

For more information on lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

 

Home loan comparisons on Mozo - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.
    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.
    Go to site
    Details
  • Hot DealFor a chance to win $100K towards your home loan, apply with Athena before Oct 31 & approved by Dec 15 (Please read the full T&C's)
    placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.
    Go to site
    Details
  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.
    Go to site
    Details
  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.
    Go to site
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.