Banks are offering substantial mortgage 'cashback' rewards of up to $5000, but they may be yours for the asking from other banks too, even if not advertised

Banks are offering substantial cash-bank rewards to entice new home loan customers with TSB currently offering up to $5000 and, though they may not advertise the fact, other banks are matching the promotions.

A minimum 20% deposit and staying with a lender for at least three years are pretty standard terms and conditions. If a borrower moves before the term is up, they pay back either the full or a pro-rated cashback amount.

Though these offers usually run for a set period, they are now an established part of the marketing toolkit for several of the larger banks.

It's a bit like the start of a romance: banks shower you with gifts, free TV's and tropical holidays have even been used in the past, but the long-term relationship, in this case 20 or 30 years, is less certain. It's important to consider if the initial sweeter comes with higher interest rates in the long term that could cancel it out.

Cashbacks can help spark competition within the sector, providing inroads for first-home borrowers to negotiate with their current day-to-day bank for a similar deal, if they prefer the convenience of staying put.

"Generally speaking the banks match each other, whether it's rates or cashbacks, you can generally get the same deal across all banks. The reality is we get some form of cash back for every client, usually a negotiated amount," says John Bolton, chief executive of mortgage broker Squirrel.

Refinancing is one exception and though a bank may match an interest rate to retain a customer, they generally will not match a cashback offer.

In many cases customers have already received a cashback from them in the past and, in general, they're a tool for drumming up new home loans rather than retaining existing ones, says Bolton.

When they first came on the scene, a cashback was known as a 'legal contribution' and was usually a maximum of around $1500.

They became popular when ANZ culled the National Bank brand and were a tool for other banks to target former National Bank customers who were potentially disillusioned by the merger, he says.

While valuations, building inspections and other upfront costs may be a useful way to use a cashback offer, over time they evolved to feel like more of a 'reward' and though they have included non-cash rewards in the past, banks are sticking with cash again now.

If your mortgage terms allow it, you could even pay the cashback amount directly towards your new loan.

"Banks moved away from TV's and holidays, they're trying to stand out in a noisy market and it didn't always work well for them. With cashbacks it's simple, it's easy," says Bolton.

Right now, three banks are promoting cashbacks - see below for the amounts and conditions:

Lender	Cashback offer	Conditions
	0.70% of the new lending amount, up to $5,000	Minimum $100k new lending Minimum 20% deposit Stay for 4 years  Detail
	$3000 minimum Up to $600 cashback on home, contents & car insurance	Minimum $250k new lending Stay for 3 years Must be owner-occupied first home Detail Insurance offer for first home buyers only, valid to 10 April 2022 Detail
ANZ	$3000	Stay for 3 years Must be first home buyer Detail
	$2000	Stay for 4 years Set up a 'notice saver' account first and save regularly for 6 months before applying for your loan Detail
	None advertised
	None advertised
HSBC	None advertised
Co-op bank	None advertised