Cashback deals falling out of favour with lenders

July 1, 2016 by Brendan O'Neill

Lenders

The number of cashback deals and the amount being offered has fallen during the last year. Finance experts have labelled this news as ‘disappointing’, especially as the mortgage market is currently very competitive.

Cashback deals have previously been an excellent incentive used by lenders to attract borrowers to their products. As they are generally offered to those with a high Loan to Value, they are often welcomed by borrowers on a tight budget. However, the latest data revealed by Moneyfacts, shows that 280 deals have been withdrawn during the last 12 months. The cashback amount has also fallen, from £570 in June 2015 to £362 at present.

The finance expert for Moneyfacts, Charlotte Nelson, said it was disappointing that the deals were dwindling, as the market is experiencing huge levels of competition. Nelson added that the incentive has been useful for some borrowers, as it helped to ease the often high upfront costs. As Nelson explains that there are fewer incentives available from lenders, she adds that it could be to compensate for the extremely low interest rates which are now being offered.

Nelson goes on to say that borrowers who undertake a thorough search of deals available may still be able to find cashback incentives up to £1,500. Nelson did add that the whole cost of the product should be calculated to discover whether it is good value in the long term.

As mortgage advisers are required to study for CeMAP courses, they are qualified to advise borrowers about various deals which may be available, and which are the best value.