Mortgage refinancing is hitting record highs with borrowers looking for better deals as interest rates continue to rise.
According to the latest figures, in August there were $19 billion worth of refinanced loans while new lending figures have dropped by 25% since the start of the year to $25 billion per month.
The mortgage broking industry is now accusing banks of “borderline misleading behaviour” with its push to encourage people to refinance by offering cash back incentives.
Finance Brokers Association managing director Peter White says, while banks offer cash back incentives, it is the brokers who effectively end up subsidising the deals.
He says brokers must pay back a tiered amount of their initial commission from the banks if a borrower refinances within two years.
The FBAA is preparing a report on the issue for Financial Services Minister Stephen Jones in an effort to have him review the situation. It wants to limit the cost of cashback to mortgage brokers.
PropTrack executive manager economic research Cameron Kusher says the banks know the refinancing market is going to be very strong in the next six months and they are doing what they can now to increase their market share.
Reduce Home Loans is offering $10,000 cashback; uBank $6,000 on loans of $1m or more and $4,000 on loans under $1m; AMP is offering $5,000; Bank of Melbourne, St George and RAMS are all offering $4,000, all with conditions.