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With mortgage demand falling 19.2 per cent year on year, according to credit reporting bureau Equifax, and the official cash rate reaching a 15-year high, brokers are reporting increased use of cashback incentives by lenders to retain customers or muscle brokers out of a deal.
Against this backdrop, and as broker market share hits an all-time high, Leo Gagic, CEO of the Finance Brokers Association of Australasia, said cashback incentives had once again become a prominent feature of the lending landscape.
“The mortgage market is highly competitive and, with application volumes under pressure, it is understandable that lenders are looking for ways to attract customers and grow market share,” he said.
“Lenders are absolutely entitled to offer cashback incentives and compete aggressively for business within the required legal and regulatory guardrails.”
Ensuring a competitive market
Cashback offers, commonly worth $2,000–$4,000, reward borrowers for refinancing or taking out eligible purchase loans.
Current offers include up to $4,000 from IMB Bank and $3,000 from ME Bank, while BankVic also competes through membership-based incentives.
In April, Broker Daily’s sister brand, The Adviser, reported that Australia and New Zealand Banking Group was offering discretionary cash payments and discounts of approximately $2,000 to customers seeking to discharge their loans.
At the time, brokers heavily criticised interventions arriving after substantial refinancing work, therefore leaving that work unpaid.
Speaking more broadly about cashback offers, Gagic said the incentive itself was not the concern, but rather ensuring lenders could compete while maintaining a fair and competitive market.
“Short-term market share gains should not come at the expense of long-term channel relationships that are fundamental to a competitive and sustainable lending market,” he said.
“The challenge is not whether lenders offer incentives, but how they do so. When offers are only available through selected origination channels, or one channel receives a materially different proposition, the potential for channel conflict increases.”
Alex Veljancevski, director of Eventus Financial, said he had also seen a resurgence in cashback offers through direct channels.
“I think this creates two significant concerns: the competitive disadvantage for mortgage brokers and, more importantly, the potential implications for consumers,” he said.
“When lenders offer cashback incentives exclusively through their direct channels, it can encourage borrowers to approach a bank directly rather than seek independent guidance from a mortgage broker.
“The concern is that borrowers may be attracted to an upfront cash incentive without properly considering whether the loan is the most suitable option for their circumstances.”
Veljancevski said that while a cashback offer worth several thousand dollars could initially be appealing, any savings could quickly be eroded if the loan came with less favourable terms.
While mortgage brokers are bound by the best interests duty, Veljancevski noted that lenders dealing directly with customers were not subject to the same statutory obligation.
“By offering cashback incentives exclusively through direct channels, lenders are effectively encouraging consumers to bypass a distribution channel that provides this additional statutory protection,” he said.
“I think this raises an important question: Should lenders be financially incentivising customers to use a channel that doesn’t provide the same best interests duty protections?
“This isn’t to suggest that banks are necessarily recommending unsuitable loans through their direct channels. However, consumers may be making significant financial decisions without the benefit of a broader market comparison or the additional protections that come with engaging a mortgage broker.”
Gagic added that lenders needed to consider the long-term implications of their promotional campaigns, rather than simply chasing short-term gains.
“While a promotional campaign may deliver a short-term uplift in volumes, lenders should also consider the longer-term value of maintaining equitable relationships across all distribution channels,” he said.
“Australia’s lending ecosystem works best when lenders, brokers, aggregators and direct channels operate within a framework of mutual respect and healthy competition.
“Growth and market share are important objectives, but fairness and consistency remain equally important.”
Brokers hit back at ‘broken’ clawback model
While cashback incentives are raising questions about competition between distribution channels, broker remuneration remains another source of tension between lenders and brokers.
The Mortgage and Finance Association of Australia’s 2026 State of Mortgage & Finance Broking Report found that median reported gross clawbacks reached $11,442 in 2025, up 16.5 per cent based on matched aggregator data.
Although some lenders, notably ING, have reformed their clawback frameworks, brokers continue to question a model that can require them to repay commission long after a loan has settled.
“I think the current model is broken and well overdue for a rethink,” said Mansour Soltani, director at Soren Financial.
“We do the work upfront, meet our compliance obligations, and put the client into the right loan. Then, if that client sells 14 months later because they got a job transfer, went through a separation or their circumstances changed, we hand back commission we’ve already earned and often already paid tax on.”
Soltani said that, at one point, three of his clients went through separations in a single month, costing his business $17,000 in clawbacks.
“Once you factor in the cost of writing the deal, there are files where you end up working for free or actually out of pocket,” he said.
“No other profession gets paid for completed work and then told to give it back two years later because the client’s life changed.”
[Related: Brokers want a regulatory standard for clawbacks]
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