In an attempt to lure Australians back into the market, Australian lenders are sweetening their mortgages, resorting to rebates and even going so far as to offer frequent flyer points.
Despite being slapped with a spate of restrictions by the regulators and despite coming under fire for lending a little too freely during the royal commission, the banks seem to be trying to turn back on the credit tap.
“There are plenty of little deals being done across the board. It really talks to how they’re trying to change the way they’re attracting customers and frankly they need customers,” The Motley Fool Australia chief investment officer Scott Phillips told Your Money Live.
Westpac and CBA subsidiary BankWest currently offer cash rebates of $2,000 and $1,500 respectively when you refinance a loan worth more than a quarter of a million dollars with them.
Other lenders, like Granite Home Loans, are offering deposit-free mortgages with a whopping initial interest rate of 6.5 per cent, while others still are offering frequent flyer points.
A quick tally though of how much extra a customer would pay over the life of the loan at an interest rate even 0.5 per cent higher than the market average, however, quickly renders any rebate or reward null and void, Phillips warns.
“As long as the banks think you’re a good deal, [i.e.] they can sell the property if you default, then it’s worth it for them to lend you the money,” Phillips explained.
“They are appealing for the now, they are not appealing for the long-term.”
The offer of these sorts of loan products suggests that the mortgage market has fundamentally shifted to the point where banks are now trying to coax customers back as property prices continue to fall.
Watch the full segment above.