Why Australians are refinancing

If you haven't checked your home loan rate in the last twelve months, there's a good chance you're paying more than you need to. Refinancing now accounts for 38% of all residential lending activity in Australia, up from 29% just two years ago, and last year alone more than 640,000 mortgages were refinanced nationally: a 20% jump on the year before.

Borrowers are voting with their feet, and lenders know it. There are some excellent deals out there if you know where to look.

This guide walks through what refinancing actually involves, when it makes sense, what it costs, and how much you could realistically save based on current 2026 lending conditions.

When refinancing makes sense

Refinancing means replacing your existing home loan with a new one, either with your current lender (an internal refinance) or a different one (an external refinance). The new loan pays out the old one, and you move forward under new terms, a new interest rate, and sometimes a new loan structure altogether.

People refinance for a range of reasons: to secure a lower interest rate, to access equity for renovations or investment, to consolidate other debts, to switch from a variable to a fixed rate (or vice versa), or simply because their financial situation has changed since they took out the original loan.

Is 2026 a Good Time to Refinance?

The RBA cash rate has held at 4.35% through much of 2026, but the gap between what existing borrowers pay and what new customers are offered has widened significantly. This gap is sometimes called the "loyalty tax." According to data highlighted by the Mortgage & Finance Association of Australia (MFAA), borrowers who switch to a new lender save an average of $1,908 a year.

There's also a timing argument for acting sooner rather than later. Forecasts are split: ANZ has flagged that the probability of a rate hike by November has climbed to roughly 80%, even though its base case still has the RBA on hold for the rest of the year. Westpac is the more hawkish outlier, expecting a hike as early as August, while CBA and NAB sit in the hold camp with ANZ's base case. If a hike does land, borrowers who refinance now lock in today's pricing before it potentially gets more expensive to sit on a variable rate, rather than waiting and hoping the gap closes on its own.

Here's the pattern showing up across the market in 2026:

• Big four bank variable rates are typically carded between 6.20% and 6.79% for existing owner-occupier borrowers
• The sharpest refinance rates currently available sit around 5.93% for borrowers
• The average owner-occupier rate sits somewhere in between, depending on loan size, loan-to-value ratio, and how long ago the loan was taken out
• Some lenders are also offering cashback incentives of up to $3,000 for eligible refinances, which can go a long way toward covering the switching costs below

That spread means a borrower sitting on a 6.15% rate with a major bank could potentially move to around 5.93% with the right lender: on a $600,000 loan, that's roughly $85 a month, or over $1,000 a year, and more on a larger mortgage. Factor in cashback of up to $3,000 from eligible lenders, and the first-year benefit can be considerably higher again. Rates shift regularly, so the exact numbers you're offered will depend on your circumstances; a broker can pull the current rate card for your specific position rather than relying on advertised averages.

Signs It Might Be Time to Refinance

You don't need to wait for a crisis to refinance. Some of the clearest signals include:

You haven't reviewed your rate in over a year. Lenders rarely pass on the best available pricing automatically. If your last rate check was more than 12–18 months ago, you're a strong candidate for the loyalty tax.

Your fixed rate period is ending. Borrowers rolling off a fixed rate often land on a lender's standard variable rate, which is rarely competitive. This is one of the most common and predictable refinancing triggers.

Your property has grown in value. If your equity position has improved, you may qualify for a lower loan-to-value ratio (LVR) tier, which often unlocks a better rate and can remove the need for lenders' mortgage insurance (LMI) if you were paying it originally.

Your income or circumstances have changed. A pay rise, a new job, paid-off debts, or reduced expenses can all improve your borrowing profile and open up lenders or rates that weren't previously available to you.

You want to consolidate debt or access equity. Refinancing can be used to roll higher-interest debts like car loans or credit cards into your mortgage, or to release equity for renovations, an investment property, or other goals.

Your current loan doesn't fit your life anymore. Fixed vs variable, offset accounts, redraw facilities, interest-only periods: what suited you at settlement may not suit you now.

What Does Refinancing Actually Cost?

Refinancing isn't free, and it's worth weighing the costs against the savings before committing. Typical costs include:

• Discharge fee from your current lender (usually $150–$400)
• Application or establishment fee with the new lender (some waive this for refinances)
• Government fees for registering and discharging the mortgage
• Break costs, if you're refinancing out of a fixed-rate loan before the fixed term ends: this can be significant, so it's worth checking before you commit
• Lenders mortgage insurance (LMI), if your new loan-to-value ratio is above 80% (this typically doesn't apply if you have sufficient equity)
• Valuation fees, though many lenders cover this as part of the offer

For most borrowers, these costs are recovered within the first few months of a lower repayment, but it's a calculation worth running properly rather than assuming, especially if you're on a fixed rate.

Worth noting: some lenders currently offer cashback incentives of up to $3,000 for eligible refinances, which can offset, or in some cases more than cover, the switching costs above. Eligibility depends on loan size, lender, and LVR, so it's worth checking what applies to your specific situation.

The Refinancing Process, Step by Step‍

1. Review your current loan. Check your interest rate, fees, and remaining loan term, and confirm whether you're in a fixed-rate period that would trigger break costs.
2. Get a clear picture of your finances. Lenders will reassess your income, expenses, and credit position as if you were a new applicant, even though you already have a mortgage.
3. Compare your options. This is where a broker earns their keep: rather than checking one or two banks yourself, a broker can compare rates and policies across dozens of lenders based on your actual profile, not a generic advertised rate.
4. Get pre-approval. A conditional approval gives you certainty on what you can access before you commit to switching.
5. Submit the formal application with supporting documents (payslips, PAYG summaries, bank statements, and property information).
6. Settlement. Once approved, the new lender pays out your existing loan, and your new loan begins. This typically takes two to four weeks from application to settlement, though it varies by lender.

How Much Could You Save?

The honest answer is: it depends on your loan size, your current rate, and what you qualify for elsewhere. As a general guide, on a $600,000 loan, moving from 6.50% to 5.93% saves roughly $220 a month, or over $2,600 a year, before accounting for the switching costs above. With cashback of up to $3,000 available from some lenders, the net benefit in year one can be substantially higher again once switching costs are factored in. Run your own numbers with a refinance calculator, but treat the output as a starting point rather than a final figure, since your actual rate depends on lender policy, credit position, and equity, not just the advertised number.

Try out our calculator

Frequently Asked Questions

How long does refinancing take in Australia? Most refinances settle within two to four weeks of a completed application, though this can vary depending on the lender and how quickly documents are provided.

Will refinancing hurt my credit score? A refinance application involves a credit check, which can cause a small, short-term dip. Comparing options through a broker limits this to a single, considered application rather than multiple separate enquiries.

Can I refinance if I'm on a fixed rate? Yes, but you'll likely need to pay a break cost to exit the fixed period early. It's worth having this calculated before deciding, as it can sometimes outweigh the savings.

Do I have to refinance with a different lender? No. An internal refinance, renegotiating with your existing lender, is an option, though external lenders are often more willing to offer sharper pricing to win new business than to retain existing customers.

Is refinancing worth it for a small rate difference? On larger loan balances, even a 0.25–0.5% rate reduction can be worth thousands over the life of the loan. It's worth running the numbers rather than dismissing a small-looking difference.

Talk to a Broker Before You Decide

Advertised rates are a starting point, not a guarantee of what you'll actually be offered. The right outcome depends on your income, your equity position, your goals, and which lenders are competing for your specific profile at this moment, and that's exactly where a broker adds value over comparing rates yourself.

At Mortgages Plus, we compare your current loan against the market, run the real numbers on costs versus savings, and handle the process end to end. If you're not sure whether refinancing makes sense for you right now, that's a conversation worth having before rates move again.

One thing I see every week is borrowers assuming they'll automatically receive their bank's best interest rate. In reality, that's rarely how it works. Some of my biggest refinance savings have come from clients who simply hadn't asked the question for three or four years

Chris Dodson, Director & Principal, Mortgages Plus(MBA, BA, Cert IV Finance) Get in touch: chris@mortgages-plus.com.au

Sources: RBA cash rate and monetary policy data(rba.gov.au); refinancing volume and lending statistics (ABS, Australian Banking Association); comparative rate data (Finder, Canstar, Savings.com.au). Rates and figures cited are indicative as of July 2026 and change regularly. Confirm current pricing before making a decision.