– ANZ is offering a 1.5% cashback to new home loan customers with at least 20% equity.
– The offer, available until December 16, 2025, is 50% more than what the other main banks currently offer.
– Mortgage brokers expect other banks to compete as the fight for market share heats up.
The country’s largest bank is trying to reel in new customers with one of the biggest cashback offers seen for years.
ANZ is offering a special cash contribution of 1.5% of lending to new home loan customers who have equity of at least 20%.
The sharp deal, which runs until December 16, follows comments from ANZ’s chief executive, Antonia Watson, last week that the market leader would look to win back some of the mortgage-market business it has lost in the last 12 months.
ANZ’s latest cashback offer is 50% more than what any other main bank is offering and, according to mortgage brokers, could be enough to pay for several trips to Fiji, Christmas presents or some new sofas.
The offer comes amid expectations that the Reserve Bank will cut the Official Cash Rate by 25 basis points next week. Most experts believe the main banks will pass on the lower rate to their customers.
GV Financial Services director Gareth Veale said ANZ offer would be very tempting for some borrowers, who, depending on the size of the debt, could get more than $10,000 just for switching banks.
“If someone has a $1m debt and they shift to ANZ, they get $15,000. That’s massive.”
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He said that the sums involved meant mortgage-holders would still have plenty of money to play with even after paying break fees.
The average loan size for his clients – both investors and homeowners – was around $800,000, which meant they would be eligible for a $12,000 cashback from ANZ compared to $7200 from the other main banks.
“It’s a bonus for people coming into Christmas. It’s bloody cool,” he said.
Mortgage broker Gareth Veale: “If someone has a $1m debt and they shift to ANZ, they get $15,000. That’s massive.” Photo / Supplied
Veale expected other banks to follow ANZ’s lead. “They all compete around the cashback, and ANZ has just come out with effectively 50% more cashback. I’d hope the other main banks look to match or compete with that.
“It’s the biggest bank in New Zealand, so when ANZ does something, other banks usually follow suit.”
An ANZ spokesperson said the cashback offers were there to give customers extra support upfront and to help with the cost of moving, refinancing, or other expenses.
Float Mortgages financial adviser Geoff Christopher told OneRoof that ANZ’s 1.5% cashback offer highlighted the level of competition in the mortgage market right now.
Homeowners on the cusp of refixing their loans have a lot of options in the current market, ranging from low one-year and five-year deals to cash-back offers. Photo / Alex Burton
He said that the offer might only make sense for certain groups, including people who were floating or due to refix their interest rate before December 16 or buyers who had found a home but weren’t due to settle for a few weeks.
Those buyers would certainly be able to use the ANZ offer to push their existing bank on cashbacks, he said.
Christopher felt there were drawbacks to cashback offers. Anyone who tried to move banks sooner would usually have to repay all or at least some of the cashback, he said.
Banks also offered retention packages if customers asked, he said, but they were much smaller and usually hovered around 0.3% or 0.4% and were dished out case by case.
“It’s definitely a case of if you don’t ask, you don’t get, and it’s an embedded system where loyalty does not get rewarded ever.”
Cotality chief economist Kelvin Davidson said banks originally offered cashbacks to cover legal costs, but now the cash being splashed about paid for much more than that.
Davidson said most people were either floating or fixed on shorter-term interest rates as they “rode the interest rate wave down” so switching banks was probably an option for a lot more people than it had been previously.
“Banks know that. They are trying to switch customers from other banks, and cashbacks are one way of doing that,” he said, adding that having cash in the bank was always an attractive proposition.
But Loan Market Agile director and mortgage adviser Rodney King said ANZ’s cashback offer might not work for everyone as it was only available for a limited time.
“I think where it’s going to be really helpful is for those buyers who are in the process of putting offers on properties and finalising their finance. As yet, no other banks have started to match it, but it will be interesting to see if they do follow suit in the next couple of days.”