Banks spend big for little gain

The major banks’ 1.5% cashback campaign at the end of last year cost them $100 million, with only a small share of home loan borrowers benefiting.

Kicked off by the ANZ, the cashback offer coincided with mortgage rates being near their lowest point and a larger than normal share of mortgages rolling off fixed-rate terms.

New customers to the major Australia-owned banks were offered up to 1.5% off their mortgage balance as an upfront payment to attract new mortgage business, compared with typical levels of about 0.9%.

As a result, nearly three times the usual amount of mortgage debt switched banks in December, while their market shares remained largely unchanged afterwards.