Some of Australia’s smaller lenders are using cash incentives to draw customers away from the big banks.
Newcastle Permanent Society yesterday announced it would pay borrowers $700 to switch their home loans away from major banks – the same amount as its own mortgage exit fee, which it will scrap if all the major banks drop these charges.
The move follows ING DIRECT’s plan to give $1,000 to any customer that switched their home loan to the lender and opened up an everyday savings transaction account.
But it is not just the smaller lenders that are using cash incentives to attract borrowers.
Just last week, ANZ announced its plans to cut 0.44 per cent off its three year fixed loan to attract new customers – brining its rate to 7.10 per cent, 0.7 per cent below its SVR.
In addition, the lender has said it will give up to $1,600 in fee subsidiaries until the end of the year to counter any switching costs.