The latest ASX 200 bank to end its cashback offer for new loans is Westpac Banking Corp (ASX: WBC).
Westpac is the only big four ASX 200 bank in the red today, down 0.17% to $20.86 per share in late afternoon trading on Friday.
Westpac has told brokers today that it will end its $3,500 cashback offer and raise the interest rates on its introductory two-year loans.
RateCity reports the cashback offer will remain in place with Westpac's subsidiary lenders St George, Bank of Melbourne, BankSA, and RAMS.
Borrowers hoping to take advantage of the generous cashback will have to get their applications in before 30 June, when the offer will end, and will need to settle on their new purchase by 30 September.
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Westpac and 2 other ASX 200 banks raise rates this week
From today, Westpac is also increasing the interest rate on its two-year introductory loans for owner-occupiers paying principal and interest by 0.1%.
Borrowers with a deposit of more than 30% will get the best rate of 5.59% for the first two years.
Those with a deposit of 20% or more will get 5.69%, and those with less than 20% will pay 5.99%.
According to RateCity, this is the second time Westpac has increased these loan rates in the past seven weeks. They've come on top of the rate increases from the Reserve Bank.
As reported in The Australian, Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) also bumped up their interest rates on various package and basic loans this week.
All three lenders are dumping their cashback offers.
As we reported, the $2,000 cashbacks from NAB and CBA will end on 30 June and 31 May, respectively.
According to RateCity, ANZ Group Holdings Ltd (ASX: ANZ) is still offering a $4,000 cashback on new loans.
Why are cashbacks getting dumped?
The ASX 200 banks have been using cashback offers to attract new customers.
It's an expensive way of doing things, though. And as we often see with the banks, when one makes a change to interest rates or marketing offers, the others tend to follow.
Westpac's decision to end the $3,500 cashback offer comes a few weeks after the ASX 200 bank released its half-year results.
News of the bank's $4 billion profit sent the Westpac share price 1.8% higher on the day.
Rising interest rates in today's inflationary economy are not a quick recipe for rising ASX 200 bank share prices and earnings, as we recently explained.
Is the Westpac share price a buy?
It depends on who you ask.
The first thing to note is Westpac is the second-worst performer for share price growth among the big four ASX 200 banks in 2023.
In the year to date, Westpac shares are down 8.1%, while NAB shares are down 11%.
Goldman Sachs has a buy rating on Westpac with a 12-month share price target of $24.67. So, that implies a potential 18% upside based on today's share price.
Morgans is even more bullish with a $25.98 price target and an add rating on Westpac shares.
Morgans recently commented:
We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful.
The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book.
On the flip side, Morgan Stanley recently cut its rating on the ASX 200 bank to equal weight.
However, Westpac is trading below Morgan Stanley's 12-month price target of $21 today.
