Westpac offering refinancers $2,000 cashback as $170b interest-only loans set to expire

In an endeavour to win over Aussie refinancers coming off interest-only home loans, lenders big and small are attaching all the bells and whistles to their mortgages. With the nation's second-largest mortgage lender, Westpac now offering $2,000 cashback for borrowers refinancing mortgages.

Refinancers can snag the cash rebate if they switch to the Premier Advantage Package with a loan of at least $250,000. New borrowers can also grab $1,000 cashback, but get in quick, you’ll need to apply before March 31, 2019.

The offer signals a trend of lenders cutting rates or offering big cash incentives, in order to get their hands on some of the record $170 billion of interest-only loans set to expire during the next two years.

“As property prices and loan volumes continue to fall, banks are keen to build market share and boost buyer confidence by offering up incentives like this,” said Mozo’s Director Kirsty Lamont.

Other cashback home loan offers

Commonwealth Bank	$2,000 cashback for refinancers that apply before 8 April 2019 and have their loan funded by 18 June 2019, with a minimum refinance amount of $250,000.
Community First Credit Union	$500 cashback for Accelerator Package loans taken out before 31 March 2019 with Lender’s Mortgage Insurance.
Homestar	$700 Cashback upon settlement of a Variable Rate Loan (LVR 70-80%, Owner Occupier, Principal & Interest) for refinancers
Hume Bank	$1,500 cashback on refinanced principal & interest home loans over $200,000.
St.George	$2,000 cashback when you refinance or $1,500 when you buy a home under the Advantage Package with a minimum loan size of $250,000 (excludes refinances from Bank of Melbourne, Westpac, St.George, BankSA and RAMS).
Suncorp	$1,000 cash payment when you take out an eligible home loan that requires Lenders Mortgage Insurance.

Is the Westpac cashback offer worth it?

The interest rate on the Premier Advantage Package Westpac loan for a $300,000 loan is 4.58%. Over the life of a 25-year loan, this means paying $204,345 in total interest.

Compare this to the lowest rate in the Mozo database, 3.44% from Reduce Home Loans Rate Slasher which, for the same loan, would mean $147,670 total interest. That’s a difference of $56,675!

“In the face of numbers like that, you have to ask yourself if a $2,000 cashback offer is the best option, or if you’re better off with a lower rate in the long run,” said Lamont.

“Bring in the $395 annual package fee into the equation and that $2,000 will be outweighed pretty quick.”

So if you’re coming off an interest-only mortgage and looking to refinance, then check out the home loans on offer below.