Want cash with that? Mortgage cashbacks return as housing market slows

Banks are offering cash contributions on new mortgages to attract customers as the housing market eases and the number of home loans being issued drops.

Mortgage cash contributions, or gift offers for items such as TVs, have become common over the years.

They became rarer when credit criteria tightened last year but mortgage broker Jeremy Andrews, from Key Mortgages, said lenders were now offering them again.

“I’m aware that banks are currently having a bit of non-advertised ‘price war’ on discounting some rates and offering stronger cashbacks for new loans with strong equity for the coming weeks.”

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So here’s a round-up of what’s now available from the largest banks…

On Wednesday, Kiwibank announced that customers would be offered 1% of their new home loan as a cash contribution, up to $10,000. The offer applied to applications made between June 7 and June 28.

It was available on new lending of at least $300,000, and conditional on the borrower’s banking relationship with Kiwibank not changing significantly for four years.

Borrowers needed at least 20% equity, and income had to be credited to a Kiwibank account.

At Westpac all new home loans over $500,000 could be eligible for a cash contribution offer of $5000 to help cover costs associated with buying a home, such as legal fees.

Eligible customers must draw down before the end of June to take advantage of this offer, and all potential cash offers were subject to the bank’s discretion.

A Westpac spokesperson said the bank was committed to helping people achieve their home ownership goals, and offered a range of competitive rates.

“Our bankers work hard to ensure customers have a mortgage that is tailored to their needs. The structure, term and interest rate of a mortgage should be considered alongside any cash contribution.”

This week the bank launched a campaign giving first-home buyers a chance to win $50,000 off the balance of their mortgage.

An ANZ spokesperson said it offered customers a cash contribution towards the costs of their housing transaction, such as solicitor or valuation costs, but the amount varied depending on the loan and eligibility criteria applied.

“Currently, we’re also offering first-home buyers a minimum $3000 cash contribution if they keep their home loan with ANZ for at least three years. The usual lending criteria, terms and conditions apply.”

BNZ had a range of cashback offers available for new customers, but the exact amount varied based on the specifics of the lending and the size of a customer’s deposit, a spokesperson said.

ASB is advertising a first-home buyer cashback offer of $3000 minimum for a loan of $250,000 or more, but a spokesperson said other new home lending customers might also meet the criteria for a cash contribution.

“For these customers, it is on a case-by-case basis and based on the overall value of their loan, together with meeting our standard lending criteria.”

Andrews said the practice benefitted existing borrowers with loans due to roll over in the near future, and promoted additional new refinances of low loan-to-value ratio loans.

“It will also help to balance the banks’ loan books to allow more low deposit loans for first-home buyers to be written.”

Independent mortgage brokers should know the criteria of different banks’ offers and which one would fit their clients needs best, he said.

Mortgage lending has eased significantly since the market boom peaked last year. The Reserve Bank’s latest figures showed there were 13,939 new mortgages in April.

That was the third-lowest number in a month since 2014. Only April 2020, when the country was in the first Covid prompted lockdown, and January this year had lower numbers of new mortgages.