"Rates have started to go up in the past few months, so cashback incentives have stepped into the void somewhat, offering a simple way for providers to keep drawing in customers."
Additionally, borrowers are likely to see more cash than they did a year ago, with the average cashback amount increasing by £41 to stand at £409.
However since this month's rate rise, the number of deals with cashback available to first-time buyers has shrunk by 30%, from 460 to 321.
Charlotte Nelson, Finance Expert at Moneyfacts, said: “Following the recent base rate rise, many borrowers are starting to look at the cost of their mortgage more closely, so it’s great news that there’s been an increase in the number of deals on the market that offer a cash rebate.
“Rates have started to go up in the past few months, so cashback incentives have stepped into the void somewhat, offering a simple way for providers to keep drawing in customers. Maybe that’s why 80% of the five-year fixed rate Moneyfacts Best Buys now have this type of freebie in its incentive package.
“Cashback is usually considered an incentive for those with higher loan-to-values. That’s why first-time buyers will be disappointed to find that since the base rate announcement the number of deals with cashback available to them has shrunk by 30%, from 460 products available to those with a 5% or 10% deposit on 1 November to 321 today.
“While borrowers may be wary of getting something for nothing, a deal with cashback can often work out to be the most cost-effective. For example, at first glance the lowest five-year fixed rate from TSB at 1.74% (with £995 fee and no incentive package) appears to be the best deal. However, Nationwide Building Society’s 1.79% five-year fixed rate with £500 cashback (£999 fee) works out slightly cheaper in terms of true cost.
“Cashback deals are often associated with higher rates and fees, yet as more make their way into the Best Buys this is not necessarily the case. Savvy borrowers should use this latest cashback trend to their advantage."
