Banks sweeten deals to lure customers as competition, house market heat up

ASB offered a free Galaxy tablet and $500 cash to customers taking out a mortgage of more than $100,000. Photo / APN

Banks are going into battle for new customers with free tablet computers, contributions to house painting and cash handouts all up for grabs.

With house sales up and interest rates set to stay low, banks are offering other "sweeteners" to get new business and lure customers from other banks.

This week Kiwibank announced a special low Christmas interest rate of 4.85 per cent for six months for all new customers, while ANZ and Westpac were offering $1000 cash back as well as up to $1000 towards legal fees.

ASB offered a free Galaxy tablet and $500 cash to customers taking out a mortgage of more than $100,000. Mortgages over $250,000 earned an extra $500.

John Bolton, from Squirrel Mortgage, said the deals were a sign of the competitive market.

"All of the banks are fighting for business and consumers are benefiting from that," Bolton said.

"It is a competitive market so across the industry you are getting promotional deals of around $2000 thrown at you whether it is cash, paint or a tablet."

Bolton said no bank would risk losing a customer over rates so would often match what another bank was offering.

"Banks are not going to let other banks beat them on rates. They are not going to let another bank steal their customers," Bolton said.

Bruce Thompson of Kiwibank said increased competition was expected with the buoyant spring housing market. Kiwibank was gaining 2000 new customers each week.

"We have gone from 1500 switching to Kiwibank to 2000 a week. A lot of those are from National Bank but it also shows there is some mood for change," Thompson said.