CommBank has signalled an end to its $2,000 cashback offer bowing to investor pressure amid a forecasted slowdown in new lending.

Speaking to the Savings Tip Jar podcast, WLTH Co-founder and CEO Brodie Haupt said cashback offers are a lazy way for the major banks to gain customers.

“Major banks are failing to understand their unit economics around the cost of acquisition for a customer,” Mr Haupt said.

“So rather than trying to generate and invest in education for their borrowers and customers, they look for retention.

“CBA is really guilty of this - they don't want to lose them and they know that their customer acquisition cost is higher than that than the unit economic cost per settled loan.”

NAB’s digital brand Ubank scrapped its cashback offer, once as high as $5,000, in April.

Major banks may be winding down their cashback offers as the effects of the RBA’s Term Funding Facility (TFF) wears off and they have to repay their allocation amid an expensive market for wholesale funding.

The TFF was announced in March 2020 as part of the RBA’s response to the economic fallout from COVID-19. It provides a large amount of funding to banks at a very low-interest rate to be repaid over three years. 

Given about $200 billion of the RBA’s TFF is due for repayment before mid-2024 (CBA has $50 billion to repay), mortgage incentives will likely start to disappear.

While cashback offers can be a nice hit to the hip pocket for borrowers, they can distort the market and hide the true cost of a loan. 

A competitive interest rate will typically trump a one-off perk, particularly on larger loans.

So before you consider switching banks for the sole reason of getting a quick cash bonus, read the fine print and do the maths.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
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Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
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  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
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  • Unlimited additional repayments free of charge
 Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

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