‍Rates Have Risen Four Times in 2026: 7 Ways to Cut Your Home Loan Repayments Now

Key takeaways

• The cash rate is now 4.60% after the RBA’s fourth rise of 2026 on 29 September. The average variable rate is about 6.49%, the highest since 2011.
• Existing borrowers often pay around 1% more than new customers with the same lender. On a $600,000 loan, that gap is worth about $370 a month.
• The fastest win is a five-minute call asking your lender to reprice. The script is below.
• Refinancing can save more, but check your break costs, fees and whether you still pass a new lender’s serviceability test first.

If your mortgage repayment has gone up four times this year, you’re not imagining it. On a typical $600,000 loan, the 2026 rate rises have added close to $400 a month to repayments. For a $1 million loan, it’s more than $600.

The good news is that most borrowers have more control than they think. Banks reserve their sharpest rates for new customers, and many existing customers are paying well above what they could get. This article shows you exactly how to close that gap, step by step, starting with the quickest wins.

How much the 2026 rate rises have cost you

•    Four rises in one year. The Reserve Bank lifted the cash rate in February, March, May and September 2026, taking it to 4.60%. It has said further rises are possible if inflation stays high. There is a real risk that they hike again on Melbourne Cup day next month.

•    Repayments are up sharply. Canstar estimates the four rises have added about $364 a month to a $600,000 loan since January. The September rise alone added about $91 a month.

•    Borrowing power is down. AMP estimates an average earner can now borrow about $45,000 less than in January, which matters if you plan to refinance or upgrade.

The loyalty tax: why you’re probably paying too much

Lenders compete hard for new customers and rely on existing ones not checking. Canstar found 23 lenders cut at least one variable rate between May and July 2026, even as the RBA was raising rates, but only for new borrowers. A borrower on a five-year-old loan who has never renegotiated likely paid about 0.5-1 percentage point more than a competitive new-customer rate.

On a $600,000 loan with 25 years left, that gap costs about $370 a month, or more than $10,000 over two years, even after switching costs (Canstar, July 2026).

7 ways to cut your home loan repayments

1. Ask your lender to reprice your loan

This is the fastest, cheapest win. Most lenders have a retention team with authority to cut your rate to keep you. You don’t need to refinance or fill in an application, and it often takes one phone call.

What to say:

“Hi, I’ve had my home loan with you for [X] years, and I’ve always paid on time. My current rate is [X]%. I’ve seen new customers being offered [X]% and I’m considering refinancing. Before I do, can you review my rate? What’s the best you can offer to keep me?”

Before you call, check your current rate, your loan balance and roughly what your home is worth. If the first offer is small, ask to be transferred to the retention or discharge team, as they usually have more room to move.

Banks have retention teams, and losing you as a client costs them a lot of money, it's cheaper to cut the rate than lose your business.

2. Know what new customers are being offered

You can only negotiate well if you know the market. Look up your own lender’s rate for new customers with a similar loan size and deposit, and compare it with a few other lenders. If there’s a gap of 0.3% or more, you have a strong case. A broker can show you rates across the whole market in one go, including lenders you won’t find on comparison sites. There is no harm in looking around and knowing what is out there.

3. Refinance to a sharper lender

If your lender won’t move enough, switching can save the most. On a $1 million loan with 25 years left, cutting your rate by 0.5% saves about $312 a month, or around $3,750 a year. Cutting it by 1% saves about $618 a month, or around $7,400 a year.

Refinancing isn’t free, so check if it stacks up first. See “When refinancing is worth it” below.

4. Make your offset account work harder

Every dollar in an offset account reduces the interest you pay at your full home loan rate, tax-free. Keeping $50,000 in offset at 6.49% saves about $3,245 a year in interest. Have your salary paid straight into the offset. If your loan has no offset, ask whether you can add one, as some lenders now offer them at no extra cost. Offsets reduce compound interest.

What Is Compound Interest? Interest on interest: Unlike simple interest (which calculates returns only on your initial principal), compound interest calculates returns on your original money plus any accumulated interest from previous periods. Compound interest is famously called the eighth wonder of the world in a quote often attributed to Albert Einstein: "He who understands it, earns it; he who doesn't, pays it."

5. Think carefully about fixing

With the RBA warning that more rises are possible, fixing part of your loan can give certainty. The trade-offs are that fixed rates often already price in future rises, you may lose offset features, and breaking a fixed loan early can be expensive. A split loan, part fixed and part variable, gives you some certainty while keeping flexibility.

6. Restructure for breathing room

If cash flow is tight, extending your loan term or switching to interest-only (if possible) for a short period can lower repayments straight away. On an $800,000 loan at 6.49%, moving from 20 years remaining to 30 years cuts repayments by about $909 a month. But it adds a lot of interest over the life of the loan, so treat it as a short-term measure and talk it through first.

7. If you’re struggling, ask for hardship help early

If you can’t keep up with repayments because of illness, job loss or another change in circumstances, you have the right to ask your lender for a hardship variation, such as a temporary pause or lower repayments. Your lender must respond in writing, generally within 21 days. Asking early protects your credit file and gives you more options. You can also call the free National Debt Helpline on 1800 007 007.

When refinancing is worth it

Before you switch, check these five things:

• ‍Break costs. If you’re on a fixed rate, breaking it early can cost thousands. Ask your lender for a written quote.‍
• Switching costs. Expect a discharge fee from your current lender, government registration fees and possibly an application or valuation fee. These typically total $350-$500.‍
• LMI. If you owe more than 80% of your home’s value, a new lender may charge lenders mortgage insurance again, which can wipe out the savings, so it often isn’t worth it. It's best to try to get higher valuations through brokers who can run these for you via multiple lenders.‍
• Serviceability. A new lender will test whether you can afford repayments at about 3% above its rate. With rates higher this year, some borrowers no longer pass. If that’s you, repricing with your current lender (option 1) is often the better path. Some lenders use a lower buffer for like-for-like refinances where repayments go down. Ask your broker whether you qualify.‍
• Break-even point. Divide your total switching costs by your monthly savings. If you’ll recover the costs within about 12 months and you plan to keep the loan longer, refinancing usually makes sense.

A worked example

Sam and Alex have a $1 million variable loan with 25 years left. They took it out five years ago and have never renegotiated.

• ‍Current rate: about 6.74%, with repayments of about $6,900 a month‍
• Step 1, reprice: their lender cuts the rate by 0.5% to 6.24%, saving about $312 a month‍
• Step 2, offset: they move $50,000 of savings into an offset, saving about $3,100 a year in interest‍
• Result: about $7,000 a year back in their pocket, from two phone calls and a bank transfer

Rates and figures are illustrative only. Your savings depend on your loan, lender and circumstances.

What I’m seeing with clients right now

• Karen, a senior lawyer, came to me with her home and two investment properties. Like many busy professionals, she’d been paying the loyalty tax for years without the time to fix it. We reviewed all her loans and refinanced her with a lender offering better rates. She now saves $250 a month, her loans are structured for retirement, and we review them every six months so she doesn’t drift back onto an uncompetitive rate.
• Lenders are discounting existing customers by up to 0.25% when presented with a competing offer.
• Some refinances now fail serviceability, so repricing in place is often the best first move.

Your action plan this week

☐  Find your current interest rate and loan balance (on your app or latest statement).

☐  Look up what your lender offers new customers for a similar loan.

☐  Call your lender and use the script above.

☐  Move spare savings into your offset account.

☐  If your lender won’t move, get a free rate check from a broker.

Get a free rate check. If you need a check, reach out to your broker, or I'm happy to help.

Frequently asked questions

Will my bank lower my interest rate if I ask?

Often, yes. Many lenders have retention teams that can reduce your rate to keep you, especially if you have a good repayment history and can point to a better offer elsewhere. It costs nothing to ask.

How much can I save by refinancing my home loan?

It depends on your loan size and the rate gap. On a $1 million loan with 25 years left, a 0.5% lower rate saves about $312 a month and a 1% lower rate about $618 a month, before switching costs.

How much does it cost to refinance?

Usually $500 in discharge, registration and application fees, plus break costs if you’re on a fixed rate (we don't recommend this) and LMI if you owe more than 80% of your home’s value (refinancing above 80% LVR usually isn’t recommended). It's best to try to get higher valuations through brokers.

Should I fix my home loan in 2026?

It depends on how much certainty you need. Fixing protects you from further rises but can cost more if rates fall, and breaking early is expensive. Many borrowers split their loan between fixed and variable.

How much have the 2026 rate rises added to repayments?

About $364 a month on a $600,000 loan since January (Canstar), and more than $600 a month on a $1 million loan.

What can I do if I can’t afford my mortgage repayments?

Contact your lender early and ask for a hardship variation. Lenders must consider your request and respond in writing. The free National Debt Helpline (1800 007 007) can also help.

What is the mortgage loyalty tax?

It’s the gap between the rate existing customers pay and the lower rate lenders offer new customers. Borrowers who haven’t reviewed their loan in a few years often pay up to 0.5-1% more.

This is general information only and does not consider your personal circumstances. Repayment figures are estimates for illustration only. Speak to a broker before you decide. Mortgages Plus is an authorised Credit Representative (No.50855) of Australian Mortgage Advisors Group Pty Ltd, Australian Credit Licence No. 388570.

Sources

RBA rise to 4.60%: CommBank newsroom: RBA raises cash rate to 4.60%

Hardship help: Moneysmart: Problems paying your mortgage‍

National Debt Helpline: https://ndh.org.au