Lenders tempt borrowers with cashback offers
Some of the newest deals to be launched onto the market recently include a cashback incentive, according to Moneyfacts, as lenders look for ways to attract borrowers.
The financial information provider has found that both the number of cashback deals and average cashback amount offered are on the rise.
There are now 1,315 cashback deals compared to just 939 a year ago and the average cashback offered to borrowers is £449, up from £366 12 months ago.
Rachel Springall, finance expert at moneyfacts.co.uk, said: “At a time when the mortgage market has undergone a period of uncertainty and with rates having subsequently risen, lenders have been eyeing up their incentive packages, not just their interest rates. On average, borrowers can get £83 more in cashback today than they could a year ago, and competition for this perk has intensified on certain deals in recent weeks.
“In just the last fortnight, Barclays, Coventry BS, Leek United BS, Loughborough BS, Sainsbury’s Bank, West Brom BS and Yorkshire BS have all launched or improved deals that include a cashback incentive. This will be great news for borrowers looking to cover the cost of moving, or to pay for the fees of instructing their own solicitor to handle the legalities.”
First-time buyer boost
According to Moneyfacts, cashback on mortgages is more dominant on deals aimed at borrowers will smaller deposits or equity.
Out of all the cashback mortgage deals on the market, 64% are available to borrowers who have a deposit of between 5% and 20%, with as much as £1,500 available. Indeed, first-time buyers may have very little cash to spare upfront, so they could be looking for an extra incentive to help them save some money.
Springall cautioned borrowers that they should look out for the most suitable mortgage deal for them, and not focus solely on the lowest rates or a standalone incentive. “It remains to be the case that a good mortgage bundle shines for itself, and most of the best deals in the moneyfacts.co.uk Best Buys for first-time buyers offer a cashback incentive.
“These incentives are coming in thick and fast, too, as within the last week, Yorkshire Building Society launched a range for small-deposit borrowers that offers £1,000 cashback, as well as no product fee. As time marches on it wouldn’t be too surprising to see even more cashback deals surface as an enticement.”