Brokers should know the criteria of different banks' offers and which one would best fit their clients' needs
As the housing market eases and the number of home loans being issued drops, banks are offering cash contributions, or gift offers for items such as TVs, on new mortgages to attract new customers.
Read more: NZ property market starts to slow down – CoreLogic
Mortgage cash contributions are making a comeback after they became rarer when credit criteria tightened last year.
“I’m aware that banks are currently having a bit of a non-advertised ‘price war’ on discounting some rates and offering stronger cashbacks for new loans with strong equity for the coming weeks,” mortgage broker Jeremy Andrews, from Key Mortgages, told Stuff.
Kiwibank recently announced a 1% offer of their new home loan as a cash contribution, up to $10,000, for applications made between June 07 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.
Read next: Kiwibank announces offering for new home loan borrowers
At Westpac, all new home loans over $500,000 could be eligible for a cash incentive of $5,000 to help cover costs associated with buying a home, such as legal fees. Eligible customers must draw down by June 30 to take advantage of this offer, and all potential cash offers were subject to the bank’s discretion.
A Westpac spokesperson said the bank offered a range of competitive rates to help people achieve their homeownership goals.
“Our bankers work hard to ensure customers have a mortgage that is tailored to their needs,” he said. “The structure, term, and interest rate of a mortgage should be considered alongside any cash contribution.”
Last week, the bank rolled out a campaign giving first-home buyers a chance to win $50,000 off the balance of their mortgage.
An ANZ spokesperson said the bank offered a cash contribution towards the costs of customers’ housing transactions, such as solicitor or valuation costs, but the amount varied depending on the loan and eligibility criteria applied, Stuff reported.
“Currently, we’re also offering first-home buyers a minimum $3,000 cash contribution if they keep their home loan with ANZ for at least three years. The usual lending criteria, terms, and conditions apply,” the ANZ spokesperson said.
Available for new customers at BNZ is a range of cashback offers, but the exact amount varied based on the specifics of the lending and the size of a customer’s deposit, a spokesperson said.
At ASB, a cashback offer of $3,000 minimum for a loan of $250,000 or more is available for first-home buyers, 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,” the ASB spokesperson told Stuff.
Andrews said the practice not only benefitted existing borrowers with loans due to roll over in the near future, it also promoted additional new refinances of low LVR loans.
“It will also help to balance the banks’ loan books to allow more low deposit loans for first-home buyers to be written,” he told Stuff.
Andrews said independent mortgage brokers should know the criteria of different banks’ offers and which one would best cater to their clients’ needs.
Following the peak in the property market boom last year, mortgage lending has eased significantly, with the Reserve Bank’s latest figures showing there were 13,939 new mortgages in April.
That was the third-lowest number in a month since 2014. Only April 2020, during the first national lockdown due to COVID-19, and January this year had lower numbers of new mortgages, Stuff reported.
