Most banks currently offer cash incentives for home owners to sign up for a "new home loan".
But the offers from three of the majors are apparently slated to end on August 31.
That means, to be sure you qualify you would need to move quickly. (You will have another four to eight weeks or so to draw down the loan if you qualify.)
ANZ, ASB and Westpac all have a time limit on their offers that ends on that date.
BNZ's offer ended formally on August 1, 2014, but that was replaced with a market-matching offer - "for a limited time you could also get yourself a healthy cash bonus* with new lending over $100,000."
BNZ isn't really promoting that offer, but it is clear the bank will front up with cash to keep you from choosing a rival.
And that may be the way ANZ, ASB and Westpac respond when their current offers expire.
Kiwibank, the Co-operative Bank, SBS Bank and TSB Bank all also have cash-back offers but without a fixed expiry date.
These banks, however, emphasise their offers are "for a limited time" - presumably awaiting the exit by the majors.
With almost everyone offering $1,000, $2,000 or as much as a $3,000 cash incentive, and almost everyone offering to match their rivals, the promotion no longer looks any different at any one bank. And that is a problem for all of them because it is no longer unique.
If you used the $3,000 incentive to pay down your loan, over the life of a 25 year loan you would save another $2,794 in interest. For a (minimum) $250,000 borrowed, instead of paying the bank a total interest charge of $232,768 over a 25 year loan at 5.99% interest on top of the $250,000 you borrowed, you would instead pay $229,974 in interest for a new $247,000 borrowed. That's a total of $476,974 to completely pay off the loan, rather than the full $482,768. (Of course these are just estimates because the interest rate won't be fixed for the life of the loan. But the differences will be similar.)
From the bank's viewpoint, they will still win 99% of the interest from you over the life of the loan. The incentive is a marketing enticement and a very minor saving - so long as you stay with them to the end. It is less like this if you chop and change banks.
You can view the current home loan incentives for all banks here.
4 Comments
Definitely a case of "ask and you shall receive"
I work for a bank and when my husband and I purchased a house earlier in the year he was determined to stay with his existing bank - despite the fact that I work for another Bank and was entitled to Discounted staff rates and a cash contribution as standard. Not that he particularly likes his exsiting bank....he just didn't want the hassle of changing!
So, we went to his Bank and asked them to match my "other Bank" staff terms.....which they did without hesitation!
The odd thing about these Cash Incentives or Legals is how the tail wags the dog.
Why have Solicitors simple conveyancing fees gone up dramaticly in line with the cash contribution being in the market and why have valuers increased the fees they charge ever since these cash incentives were provided.
Reduce the cash incentives to an in house give away like 2 -3 years house insurance premiums instead and see how the cost of conveyancing and valuations fall.
In the words of Edmund Blackadder you could say bugger me with a fish fork when you see legal fees fall.
Soon you will not get ...even if you ask or in many cases are prompted by your Solicitor Hack.
Banks still not lending above 80% as worried about imminent house price drops and borrower ability to repay going forward
http://www.stuff.co.nz/business/money/10431854/Still-tough-for-the-first-home-buyer
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.