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Why Australian Banks Offer Home Loan Cashbacks

July 15 2025 by Andy Wong


In recent years, Australian banks have increasingly turned to cashback offers as a strategic tool to attract new home loan customers. These incentives, which typically range from $2,000 to $4,000, are designed to entice borrowers to switch lenders or take out new loans. But why are banks so keen on offering cashbacks and what makes this approach preferable to other marketing strategies?

Assorted Australian cash denominations.

Image credit: Pixabay

The Competitive Landscape of Home Lending

Australia's home loan market is highly competitive, with dozens of lenders vying for a share of the multi-billion-dollar mortgage sector. With interest rates relatively stable and lending tightly regulated, banks often struggle to differentiate themselves purely on pricing and fees. Cashback offers provide a tangible, upfront benefit that can sway borrowers who are otherwise comparing similar interest rates and loan features.

Current home loan offers

$3,000 Bonus For First Home Buyers
$3,000 Bonus For First Home Buyers

Buying your first home? You could get $3,000 to use your way. Available to eligible first home buyers with an ANZ home loan of $250,000 or more.

Apply or book a free consultation today
Terms and conditions

You are eligible to participate in this Offer if:
(a) You Apply with an Apply Date from 1 December 2022 until the time the Offer is withdrawn (Note: Offer may be amended or withdrawn at any time);
(b) You are an Applicant in respect to the application(s);
(c) You have not exceeded the Offer Maximum and Exclusions;
(d) Your application(s) to ANZ relates to the Eligible Loan Purpose;
(e) Your application(s) to ANZ relates to one or more Eligible ANZ Home Loan(s) with New to ANZ Lending of $250,000 or more;
(f ) You drawdown that Eligible ANZ Home Loan(s) within 180 days from applying;
(g) If the application(s) to ANZ relates to one or more Eligible ANZ Home Loan and one or more Ineligible ANZ Home Loan, the Lending Amount for the Ineligible ANZ Home Loan is excluded as New to ANZ Lending for the purposes of this Offer;
(h) The applicant(s) must have an Eligible ANZ account, being an ANZ Access Advantage, ANZ One Offset or ANZ Plus account in the name of the borrower(s) at the time of drawdown to receive this Offer. In the case of Joint Home Loan Applications where you do not have a Joint Eligible ANZ account and you have not nominated which ANZ Access Advantage, ANZ One Offset or ANZ Plus account you would like the First Home Buyer Bonus amount paid into, ANZ may choose to pay the First Home Buyer Bonus amount into an ANZ Access Advantage, ANZ One Offset or ANZ Plus account in the name of one of the eligible applicants.
(i) You have not previously successfully applied to participate in this Offer, or redeemed an ANZ home loan offer or promotion, or received a rebate or benefit from ANZ within the 12-month period prior to applying for this Offer

Current home loan offers

Get $3,000 Back In Your Pocket
Get $3,000 Back In Your Pocket

Refinance your home loan to ME and enjoy the flexibility of extra cash in your back pocket.

Apply or book a free consultation today
Terms and conditions

A $3,000 cash back offer is available on refinances of an existing home loan from another financial institution with a minimum new lending of $700,000 and a loan to value ratio (LVR) of up to 80%. To be eligible for this offer, applications must be received from 15 June 2024 and settle within 120 days of the loan application date.

This offer is not available where any of the loan proceeds are for the refinance, restructure, switches, or top ups of home loans from ME or from other lenders within the Bank of Queensland (BOQ) Group which includes BOQ, BOQ Specialist and Virgin Money (Australia). This offer is available to Owner Occupier and Investors on all ME home loan products but is not available to applications for owner-occupied loans with interest only repayments. A home loan application involving both a purchase and refinance is not eligible.

Only one cash back will be paid per qualifying home loan application regardless of the number of borrowers. In the case of multiple qualifying applications, only one cash back will be paid per separate security property. The cash back amount will be paid within 60 days of loan settlement into the ME Everyday Transaction Account (ETA) held by the borrower first listed on the application. In the event the first listed borrower doesn’t hold an ETA, the cash back will be credited to the home loan it applies to. Terms, conditions, fees, and charges apply. Applications are subject to credit approval. The offer can be withdrawn or varied at any time.

Current home loan offers

Get A $1,000 Cashback When You Refinance
Get A $1,000 Cashback When You Refinance

$1,000 upfront home loan rebate offer available to those refinancing a home loan over $500,000.

Apply or book a free consultation today
Terms and conditions

1. The Offer is made by Heritage and People’s Choice Ltd ABN 11 087 651 125 Australian Credit Licence 244310
trading as People’s Choice Credit Union (“People’s Choice“).
2. Application for a loan to which the Offer applies is deemed to be acceptance of these terms and conditions.
3. The Offer is that People’s Choice will pay a cash rebate amount of $1,000 (“Upfront Rebate Amount”) in relation to each Eligible Loan.
4. An Eligible Loan is a loan which satisfies all of the following criteria:
(a)the application for the loan is submitted to People’s Choice during the period from 9am (ACST) on 16
September 2024 to 5pm (ACST) on 30 June 2026 (“Offer Period”) and meets the eligibility requirements of
People’s Choice for the applicable loan product;
(b) the minimum loan amount is $500,000 and the Loan to Value Ratio (LVR) is <80%;
(c) all borrowers are Eligible Borrowers (see clause 5);
(d) the loan is originated through selected People’s Choice accredited brokers;
(e) the loan is for the purpose of refinancing another loan from another lender (other than People’s Choice or Heritage Bank);
(f) the loan is not a construction loan, bridging loan or a business loan;
(g) the application for the loan is approved by People’s Choice, subject to the usual lending criteria and credit assessment processes of People’s Choice; and
(h) the loan is fully drawn down by 5pm (ACST) within 90 calendar days no later than 30 September 2026.
5. An Eligible Borrower is an individual who, at the time when the application for the Eligible Loan is made:
(a) is an Australian citizen or permanent resident of Australia;
(b) is aged 18 years or above; and
(c) is not:
(i) a director or former director of HPC or any entity to which HPC is the successor in law, or of a
subsidiary or related entity of HPC or of any entity to which HPC is the successor in law; or
(ii) an employee or former employee, who holds or held a role classified as a senior executive role, of
HPC or any entity to which HPC is the successor in law, or of a subsidiary or related entity of HPC
or of any entity to which HPC is the successor in law;
together (“Eligible Borrower(s)”).

Why Banks Prefer Cashbacks

Customer Acquisition

Cashbacks are a great way to attract new customers. They provide immediate value to borrowers, appealing to both first-time borrowers and existing mortgage holders. Cashbacks can be especially appealing for customers looking to refinance existing loans, as they may be hesitant to go through the administrative hassle of changing banks. A cashback can offset costs such as discharge fees, valuation fees and legal expenses.

Long-Term Profitability

While the upfront cost of a cashback may seem high, banks calculate that the long-term revenue from a home loan, typically spanning 25 to 30 years, far outweighs the initial expense. Interest payments, fees and cross-selling opportunities (e.g. credit cards, insurance, savings accounts) contribute to the overall profitability of each customer.

Market Share Growth

Cashbacks help banks capture market share quickly. In a saturated market, gaining even a small percentage increase in the new customer market can significantly impact a bank’s loan book and revenue. This is particularly important for smaller or regional banks looking to compete with the "Big Four" (CBA, Westpac, NAB and ANZ).

Brand Visibility and Differentiation

Offering a cashback can also serve as a marketing tool. Promotional material around cashbacks can create buzz and visibility on comparison websites and social media, helping the bank stand out.

Considerations for Borrowers

Interest Rates and Comparison Rates

A cashback might mask a higher interest rate. Borrowers should always compare the comparison rate, which includes fees and charges, to understand the true cost of the loan over time.

Loan Terms and Conditions

Cashback eligibility often comes with conditions. These may include minimum loan amounts, maximum Loan to Value Ratios (LVR) and settlement deadlines.

Exclusion of Existing Customers

Most cashback offers are only available to new customers or refinancers. Existing customers looking to renegotiate their loans are often excluded.

Limited-Time Offers

Cashbacks are usually promotional and time bound. Missing the application or settlement window can mean losing the incentive altogether.

Tax Implications

While cashbacks are generally not taxable for personal home loans, borrowers should consult a tax advisor, especially if the loan is for investment purposes.

Broader Economic and Regulatory Context

RBA Interest Rate Policy

With the Reserve Bank of Australia maintaining relatively stable interest rates in 2025, banks have limited room to compete on pricing. Cashback offers allow them to compete on perceived value without altering their rate structures.

Consumer Mobility

Australian borrowers are becoming more financially literate and mobile. The rise of comparison websites and mortgage brokers has made it easier to switch lenders. Cashbacks help banks tap into this trend by reducing the friction of switching.

Regulatory Oversight

APRA and ASIC closely monitor lending practices to ensure responsible lending. Cashback offers must comply with these regulations, and banks are careful to structure them in ways that do not encourage risky borrowing.

Strategic Implications for Banks

From a strategic standpoint, cashback offers are part of a broader customer acquisition and retention strategy. Banks use data analytics to target high-value customers, those with strong credit histories, stable incomes and potential for long-term profitability. By offering cashbacks selectively, banks can optimise their loan portfolios and reduce default risk.

Moreover, cashbacks can be bundled with other features such as offset accounts, redraw facilities and flexible repayment options, creating a more compelling overall loan package.

Conclusion

Cashback offers have become a staple in the Australian home loan market, serving as a powerful tool for banks to attract new customers, grow market share and enhance profitability. While they offer immediate benefits to borrowers, it's essential to look beyond the upfront cash and evaluate the full terms of the loan. For banks, the preference for cashbacks reflects a strategic shift toward customer-centric marketing in a highly competitive and regulated environment.

As the market continues to evolve, borrowers can expect banks to continue offering cashbacks, albeit with changing conditions and eligibility criteria. Whether you're a first-home buyer or a seasoned investor, understanding the motivations behind these offers can help you make smarter financial decisions.


Andy Wong is a co-founder at PropertySensor and has more than a decade of experience diving into finance and construction lending while working at Payton Capital and Australian Securities Limited.

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