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

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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

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Last updated 14 July 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Compare
    Details
  • Discount Great Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%, over $150k

    interest rate
    comparison rate
    Initial monthly repayment
    6.19% p.a. variable
    6.21% p.a.

    An easy to use Home Loan with no establishment fee and no monthly or annual fees. Minimum deposit of 20% is required. Mozo Experts Choice Awards - Investor Home Loan Award 2024^.

    Compare
    Details
  • Low Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.20% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    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. You can change the loan amount and term in the input boxes at the top of this table. 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

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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.