Mortgage brokers are growing sceptical about banks marketing cash back offers when standard variable rates on the same loans are not the sharpest in the market.
As banks prepare to pass another Reserve Bank interest rate hike onto mortgage borrowers, some brokers are questioning their marketing ploy of cash back offers, suggesting these can be deceptive and stir inflation.
Banks are expected to pass any Reserve Bank rate rise on Tuesday afternoon through to mortgage borrowers, and potentially a lesser amount to savers to protect margins, althoughOverall, RateCity has found 12 banks are offering a $4000 cash back on a $500,000 loan. All four of the big banks are offering cash backs for borrowers who are refinancing. “I have never seen it hotter.
“A competitive interest rate typically trumps a one-off perk, particularly on larger loans and almost certainly in the longer term.”Mr Bailey said cash back offers can distort the market; he called on major banks to put the money into a more competitive standard variable rate.
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