Cashback offers, significantly reduced interest rates and many of the other incentives banks were offering to snare a slice of the refinancing market have now disappeared.
According to Reserve Bank of Australia data, lenders in August were offering an average variable home loan rate for new borrowers of 5.99%, only 0.2 percentage points less than the average 6.2% existing borrowers are paying.
AMP chief economist Shane Oliver says pressure from shareholders to deliver higher returns, meant the major banks had now put a stop to the incentives.
He says while banks did boost their lending books, the reduced rates had affected their bottom lines.
Investment loan discounting has also slowed with new investment loans in August being offered at an average of 6.28%, which is 0.2 percentage points lower than the average rate for existing customers.
Analysis by Coolabah Capital shows during the bank “mortgage wars”, new variable borrowers were getting up to 50 basis points off their mortgages.