CBA's Decision to Remove Cashbacks Receives Industry Support

Commonwealth Bank recently announced that they will no longer offer cashbacks to customers applying for mortgages starting from 1 June. While some might think this is bad news because they won't receive immediate cash, the long-term benefits of this change far outweigh the loss of cashback rewards.

Here's why industry experts are praising this decision:

1. Increased competition: Removing cashbacks means banks will have to compete based on interest rates rather than offering quick cash incentives. This is great news for customers because it ensures they can focus on getting the best rates for their mortgages.
2. Fair market competition: By eliminating cashbacks, smaller lenders have a better chance to compete with big banks. This levels the playing field and gives customers more options to choose from, increasing fairness in the market.
3. Balanced customer subsidies: The removal of cashbacks also reduces the burden on existing customers who have been subsidizing the acquisition of new customers. This change promotes fairness and creates a more sustainable banking environment.
4. Clear loan comparisons: Cashbacks might have created confusion among customers when comparing different loans. Without them, customers can have a clearer understanding of the loan options available and make more informed decisions.
5. Protection of mortgage broker value: Cashbacks had the potential to undermine the value proposition and economics of being a mortgage broker. With their removal, brokers can focus on providing expert guidance without the overshadowing effect of cash incentives.

Overall, Commonwealth Bank's decision to remove cashbacks is a positive step in the right direction. It promotes transparency, fair competition, and better options for customers. It's a great move, and the industry welcomes it with open arms.