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Too hot to handle: CBA dumps its cashback as home loan competition caps out

Too hot to handle: CBA dumps its cashback as home loan competition caps out

09 May, 2023 - 5 min read

Australia’s largest bank, CBA, has today announced it’s discontinuing its $2,000 cashback offer from 1 June, in a further sign competition in the mortgage market is becoming too hot to handle.

Over the last two and a half months, CBA and its big bank rivals have been hiking new customer rates in addition to the standard RBA rate rises, partially reversing the discounts available to new customers (see list at end).

The latest ABS figures show a record $21.22 billion worth of loans were refinanced in March, while a total of $206.86 billion worth of loans have been refinanced since the start of the rate hikes (May 22).

Discounts and cashbacks available to refinancers have become an expensive exercise for the banks at these volumes. As a result, the number of cashback deals on offer is starting to decline.

The RateCity.com.au database shows there are currently 29 lenders offering cashback, including all four big banks. This number is down from the record high of 35 in March of this year.

RateCity.com.au analysis shows:

29 lenders are currently offering cashback deals, with the majority for refinancers only (see list at end).
The highest cashback is $10,000 from Reduce Home Loans, however, this is for a loan size of $2 million or more and not available on the lender’s lowest rate.
All four big banks currently offer cashback, however, CBA’s offer ends this month.
Westpac currently offers $3,500 for refinancers.
NAB offers $2,000 for refinancers.
ANZ offers up to $4,000 for refinancers and $3,000 for first home buyers.

RateCity.com.au research director, Sally Tindall, said: “Cashback deals have become a hot potato for the banks, with CBA the first of the big four to drop them this year.”

“The big banks have been at the centre of the refinancing storm over the last 12 months, throwing down competitive new customer discounts and cold hard cash to tempt borrowers to switch. Now they’re looking to take shelter from it,” she said.

“Back in February, CBA CEO Matt Comyn indicated the bank was feeling the heat from competition in the refinancing market. Today, CBA has taken yet another step away from the contest for new business.

“Refinancers are on the hunt for relief from the rate hikes. CBA’s decision to walk back part of its new customer discounts, and now its cashback, is likely to see it lose new business to competitors.

“The other big banks could very well fold on their cashbacks deals in coming months, but if they’re looking for growth, they’ve just been handed a reason to keep these deals on the table.

“Just because one big bank has watered down its offering, doesn’t mean competition in the mortgage market is about to burn out entirely.

“Over 70 per cent of mortgages sit with the big four banks, yet there are over 100 different lenders in the market, keeping the pressure on the biggest players.

“The more Australians take advantage of this competition, the more likely it is to stay alight,” she said.

Big bank new customer variable rate hikes: last 10 weeks

Note: these hikes are in addition to the 0.25% increase on the back of the RBA’s March and May decisions.

Date	Bank	Loan	Change
1-Mar	CBA	Basic variable	up to 0.10% pts
1-Mar + 10-Mar	NAB	Basic variable	up to 0.20% pts
25-Mar	CBA	Basic variable	up to 0.70% pts
28-Mar	ANZ	Basic variable	up to 0.21% pts
31-Mar	CBA	Package loan	up to 0.20% pts
13-Apr	Westpac	Basic variable	0.10% pts
14-Apr	CBA	Package loan	up to 0.12% pts
21-April	ANZ	Basic variable	up to 0.10% pts
28-April	NAB	Basic variable	up to 0.05% pts

Source: RateCity.com.au

Current cashback deals on the RateCity.com.au database:

Lender	Cashback	Refinancers	New loans	Notes
AMP	$4,000	✓	✓	Available on loans of $750k and above.
ANZ	$2,000-$4,000	✓	X	Cashback of $3,000 for first home buyers.
Bank of China	$2000-$4,288	✓	✓	Cashback of $2,000 for new purchases.
Bank of Melbourne	$4,000	✓	X
Bank of Queensland	$3,000	✓	X
BankSA	$4,000	✓	X
Bankwest	$2,000	✓	X
bcu	$4,000	✓	✓
CBA	$2,000	✓	X	Ends 1 June 2023.
Defence Bank	$2,000-$4,000	✓	X	Max cashback for loans over $750K.
Geelong Bank	$2,000	✓	✓
Greater Bank	$3,000-$4,000	✓	✓	Max cashback for loans over $500K.
Heritage Bank	$2,000-$5,000	✓	X	Max cashback for loans over $700K.
HSBC	$3,288	✓	X
imb bank	$2,000-$4,000	✓	X	Max cashback for loans over $500K.
ING	$3,000	✓	X
ME Bank	$2,000-$4,000	✓	X	Max cashback for loans with 40% deposit or more.
NAB	$2,000	✓	X
Newcastle Permanent	$2,000-$3,000	✓	X	Max cashback for loans over $500K.
People's Choice	$5,000	✓	X	Available on loans of $750k and above.
RAMS	$4,000	✓	X	Rebate of $1,000 for first home buyers
Reduce Home Loans	$2,000-$10,000	✓	✓	Max cashback for loans over $2M.
Regional Australia Bank	$3,000-$4,000	✓	X	Max cashback for loans over $500K.
St. George Bank	$4,000	✓	X
Suncorp Bank	$3,000-$4,000	✓	X	Max cashback for loans over $1M.
Westpac	$3,500	✓	X
RACQ	$2,000	✓	X
P&N Bank	$3,000	✓	X
Summerland Credit Union	$2,000-$3,000	✓	X	Max cashback for loans over $500K.

Source: RateCity.com.au

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Product database updated 18 Oct, 2024

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

Laine Gordon

Head of Public Relations

Laine Gordon is the Head of Public Relations at RateCity and an experienced journalist and research specialist. With a background in news and feature writing, covering finance, media and even food (a passion of hers) at Reed Elsevier publications, Laine brings almost two decades of experience to the team. Having covered major areas of interest to the general public from hip pocket issues to rising and falling interest rates and the impact to mortgages, credit and saving in Australia, she is passionate about researching and telling people’s stories to help others make better decisions about their own finances.