I see the Herald has an article that quotes Bernard Hickey and other commentators where they are surprised that banks are offering freebies for people to sign up new loans – “buying your business with your money”.
Flat-screen televisions, cash for groceries and even iPads – banks are competing to offer more attractive prizes to sweeten home loan deals as higher interest rates are forecast.
But commentators warn the prizes should be viewed only as a bonus once a loan has been settled.
One says the giveaways are “essentially buying your business with your money”.
With little separating their advertised fixed mortgage rates, banks are dangling “free” giveaways to lure prospective customers from rival banks.
Oh how terrible…
Dr Claire Matthews, of Massey University’s centre for banking studies, said people should study the entire home loan deal – including fees, terms and conditions – before being tempted by cash or giveaways.
“It might be that if you’ve got two banks that are almost identical, and one is offering a 52-inch television, then, hey, you might as well go for the television as well.
“But if somebody is offering a better deal, despite the 52-inch television you may not be better off.”
Economic commentator Bernard Hickey said similar giveaways were seen during the 2002-2007 property boom.
“But then, the banks tended to simply use price as their main way to win market-share. This time, they are being a bit more cautious about that, mainly because they want to preserve their profit margins.
The cost of such incentives were often simply added on to the mortgage, Mr Hickey said.
“What they are doing with these offers, is essentially buying your business with your money.”
What a bunch of sanctimonious hypocrites.