Cash rebates were once a great way for providers to stand out in the highly competitive mortgage market, giving borrowers a welcome cash injection at a time when their finances are understandably stretched. Cashback has been a key incentive and could no doubt sway some people to choose one mortgage over another, but unfortunately, such deals are now becoming few and far between.
Indeed, our latest figures show that these deals have begun to fall from favour, resulting in the number of available deals dropping by a staggering 280 in just one year. The amount of cashback offered has also dwindled in the last couple of years, as the table below highlights:
Charlotte Nelson, finance expert at Moneyfacts, said that the results are "disappointing", particularly given the level of competition that currently exists in the mortgage market.
"In the past, incentive packages with a cashback offer enabled borrowers with limited budgets to ease the upfront costs of securing a mortgage, but anyone looking for this 'freebie' today would struggle, as not only is the number of deals in decline but the average size of the rebate has also fallen," she said.
This is even more surprising given that the rate-cutting frenzy of last year has faded away, which could lead to the assumption that providers would be turning to other tactics to attract the attention of borrowers. "However, this does not appear to be the case," added Charlotte. "This could be because borrowers have grown wise to provider marketing tactics, or it may be because lenders are paring back their mortgages to the bare minimum in order to compensate for their record low rates.
"Cashback is often targeted towards the higher loan-to-values (LTV), which means that borrowers with tight budgets have been the hardest hit by their decline in value. For instance, the average cash rebate that is offered to borrowers with a 10% or 15% deposit (90% and 95% LTV) has fallen by £208 over the course of one year, almost putting the figure back to 2013 levels.
"Nevertheless, savvy borrowers can still hunt down deals that offer cashback of up to £1,500. However, borrowers need to assess the whole mortgage deal to ensure that it's suitable for them, and if they do get a deal offering a cash rebate, they will need to find out whether the money will be paid before or after the deal is completed."
Check out the top mortgage rates – and make sure to see what incentives you can get!
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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