September home loan sweeteners
Cashback deals, discounted rates, the waiving of fees and gift cards are among the many sweeteners financial institutions are using to lure new customers.
As competition gets fiercer among rival institutions, they are turning to bonus incentives to attract new customers.
Research by comparison website Mozo shows the home loan market is where most banks are trying to entice new customers with bonuses.
Discounted rates of up to 1 per cent, the waiving of hundreds of dollars in application fees, cash-back offers and even store gift cards are among the deals being offered to customers.
Mozo spokeswoman Kirsty Lamont says the plethora of incentives shows lenders are luring trade amid the spring selling season.
"At the moment there are 11 lenders offering limited-time incentives for new customers and that's including the major banks and smaller lenders," Lamont says.
"It's definitely very unusual to see the number of lenders out there all marketing such aggressive sign-on deals at the same time. They are competing really hard for business." But Lamont warns customers to take care before signing up for a product simply because it offers an attractive incentive.
"Borrowers need to be wary, all that glitters is not gold, for some of the deals they look very, very tempting, $1000 upfront cash in hand sounds fantastic but people have to remember the interest rate is by far the biggest cost over the term of a home loan," she says.
"Signing up on a home loan purely on a cash-back offer or a fee waiver could see you miss out on tens of thousands of dollars of savings that you could have got with a lower rate elsewhere:' ME Bank's group executive sales, Ian Hendey, says Australia's low credit growth of below 5 per cent has ramped up competition among lenders.
"It's creating a real tension for lenders to grow their market share. From a consumer point of view, sweeteners always look great on the surface hut sometimes they can leave a nasty aftertaste," she says. "So watch out for are things such as fee discounts, cash-back deals for switching, vouchers, etc.
"They are nice one-offs but they are not going to help me over the entire life of the loan, so the interest rate is the core." HSBC Bank Australia's head of mortgages, Alice Del Veccchio, says to "look beyond short-term incentives'~ "While a fee waiver or cash back may appear to provide immediate financial relief, the key is to find a combination of competitive pricing, product flexibility and a strong service proposition," she says.
Search the market to find the most competitive home loan in the market with Mozo's home loan comparison tool.
See the original article from the Daily Telegraph here.