ING has introduced a new $3000 cashback incentive to attract customers from other banks to switch their loan to the nation’s sixth largest lender.

Rival Macquarie bumped ING from the fifth spot in the lending market in August last year.

RateCity research director Sally Tindall said ING needed to “fight fire with fire”, with the cashback deal the latest tool to try and recoup some of its lost market share.

“The bank cut their one-, two- and three-year fixed rates just over a month ago. Now it’s throwing in a cash sweetener to wrestle back some business from the big banks,” Ms Tindall said.

“ING clearly wants to grow its market share, which has been inching fractionally backwards over the last year. This cashback deal will be part of their bid to turn this around.”

ING is offering the cashback on all fixed and variable rate loans, but customers must have at least $500,000 remaining on their existing loan to qualify for the promotion.

Applications up until September 30 will be eligible and will only be offered to customers refinancing from another bank, with settlement needing to occur by December 31.

The ING offer coincides with Westpac and its subsidiaries St George, Bank SA and Bank of Melbourne shaving $1000 of its cashback offer to $3000.

According to RateCity, 25 lenders are offering cashback offers on both fixed and variable lending products.

“Some of the most competitive cashback deals are fixed rate ones, however, these loans come with extra fine print that could set you back thousands if you’re not careful,” Ms Tindall warned.

Analysis conducted by the leading comparison site found taking a cashback deal and two-year fixed rate at ANZ, Westpac and ING would make a customer financially better off between $600 and $1500.

A customer that took the ING cashback deal and secured a 1.84 per cent two-year fixed rate would come out ahead by $1517 after the period.

NAB and CBA’s cashback deals in combination with the banks’ respective two-year fixed rates would make a customer worse off over the period between $500 and $800.

Ms Tindall said cashbacks traditionally came with higher rates, but the low-interest environment had sweetened the deal in customers’ favour.

“In the past, a low ongoing rate trumped a cashback deal almost every time, but banks are increasingly offering both low rates and cash back, making the equation a lot more competitive than it used to be,” she said.

“Someone who shops around for a competitive rate, haggles on fees, and commits to refinancing regularly could potentially come out ahead taking out one of these cashback deals.”

“While it’s always tempting to splurge with the extra cash, if you put the cashback money back into your home loan it’s going to deliver in spades over the life of your loan.”