A lender can advertise the same home loan twice: once with a cashback, once without. The only difference is how the borrower walks in the door. That is the practical problem behind a warning from the Finance Brokers Association of Australia, whose CEO, Leo Gagic, says incentives should be open to borrowers however they apply.
It sounds like an industry squabble. It is also a question about how mortgage competition actually works, and who ends up paying for it.
Why a bonus tied to one channel is a pricing decision
A cashback is not free money. A lender funds it from the same margin that covers funding costs, risk and distribution. When it hands out a lump sum to some borrowers and not others, it is price discrimination: the effective cost of the loan differs by the route you took to get it.
Sometimes that is defensible. Brokers cost lenders commissions and trail payments, while direct applications cost them staff and advertising. A lender might reasonably push one channel harder. The trouble starts when the borrower never sees the trade-off and simply assumes the headline offer is the market offer.
The case for each side
The broker argument is straightforward. If a borrower is steered away from a broker because the bonus only exists on the direct path, the broker channel is being penalised for doing its job. Brokers write a large share of Australian home loans, so a policy that quietly disadvantages them matters to a lot of borrowers, not just to brokers.
The lender argument is also real. A lender is entitled to run promotions that suit its own distribution costs and risk appetite. Nobody is obliged to offer every incentive through every door, and promotions are often time-limited and capped.
Commentary on this has split along predictable lines. One camp treats the issue as a fairness and competition problem. The other treats it as a consumer-cost problem: a bonus can mask a worse ongoing rate and make refinancing look cheaper than it is. Both camps can be right at once.
What a cashback does to your comparison
Key numbers
- Check the ongoing rate, not just the bonus
- Check the minimum loan size and the lock-in period
- Check clawback terms if you leave early
- Check ongoing fees and the comparison rate
Here is the catch. A cashback is a one-off. An interest rate is a monthly cost for as long as you hold the loan. A rate that sits even a small margin above the market quickly eats a bonus of a few thousand dollars across a large mortgage. Comparison rates often will not capture the cashback at all, so the loan that looks cheapest on paper and the loan that is cheapest in your pocket can be different products.
Conditions matter as much. Many cashbacks require a minimum loan size, a new loan rather than a top-up, and staying with the lender for a set period. Leave early and you may owe some or all of it back. For a borrower who might refinance again in two or three years, that turns a free-looking bonus into a soft lock-in.
Where this could go
If channel-exclusive offers stay common, expect more scrutiny of how incentives are disclosed. Regulators and industry bodies already care about whether borrowers get loans that suit them rather than loans that pay well for someone. Exclusive bonuses feed that concern because they can pull a borrower toward a channel for reasons unrelated to the loan itself.
It is a tension worth watching alongside the wider debate over best interest duty, where cheaper loans are not always the best loans. The same logic applies to cashback: the biggest offer is not automatically the right fit.
What to do before you chase the bonus
Get the loan quoted both ways. Ask the lender directly what offer applies if you apply through them, and ask a broker what the same lender offers through their channel. Put the ongoing rate, fees, cashback conditions and clawback period side by side, and work out the cost over the period you realistically expect to keep the loan.
If you are comparing options more broadly, our home loans, lenders and refinancing guide is a good place to start. For a weekly read on rates and lending, subscribe to the Australian Property Review newsletter.
General info, not financial advice.
