Cash rebates were once a great way for providers to stand out in the highly competitive mortgage market. However, research from Moneyfacts.co.uk shows 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.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:

“The research findings are disappointing, particularly given the high 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.

“The mortgage rate-cutting frenzy of last year has faded away, so it would be fair to assume that providers are turning to other tactics to attract the attention of borrowers. However, this does not appear to be the case. 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.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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