Value of cashback deals to first-time buyers drops
According to the data, while the amount of cash rebates for customers taking out loans at 90% and 95% loan-to-value (LTV) has grown to 242 from two years ago, this is still down on a year ago, when there were 254 deals. Equally, the value of these deals has fallen from £467 to £408 in a two-year period.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said it was “disappointing” to see the decline in cashback deals at a time when “providers are fighting for borrowers’ attention”.
“With average mortgage rates still falling to new lows each month, the decline of cashback on offer could be a sign that providers are stripping back their offerings to compensate for the low deals. Borrowers are also growing wise to the fact that these offers can be wolves in sheep’s clothing; they tempt the customer in but then provide a higher overall rate, making their monthly repayments far more expensive than if they had opted for a standard deal,” she added.
“While cashback offers borrowers with a limited budget, especially first-time buyers, a glimmer of hope that some upfront costs will be eased, the reliance on this can no longer be a sure bet, as not only the number of deals offering this has fallen but so too has the amount on offer.”
Nelson said borrowers willing to hunt down deals will still be able to find cashback of up to £1,000 on offer.
“And those willing to switch current accounts can receive an extra cashback boost on top of this. However, borrowers will need to assess the whole mortgage to ensure it’s the most appropriate deal for them in the long run.”