Refinancing
Refinancing in 2026: When It's Worth Switching
Three cash rate hikes in 2026 have pushed the RBA cash rate to 4.35%, held steady at the June meeting - with markets pricing in a real chance of another move in August. Every lender has passed the increases along: CBA, for one, lifted all variable home loan rates by 0.25% from 15 May 2026 after the May decision (source).
Here's the part that stings. While existing borrowers absorbed every hike in full, lenders kept sharpening their front-book offers to win new customers. The gap between what loyal borrowers pay and what new borrowers are offered - the so-called loyalty tax - is now as wide as we've seen it in years. If you haven't reviewed your loan since it settled, 2026 is the year to do it.
Signs you're paying the loyalty tax
The quickest test: compare your current variable rate against what the big banks are advertising to new customers today.
As at 4 July 2026, the sharpest advertised big-bank variable rates include Westpac's Flexi First Option at 5.99% (for loans at or below 70% LVR - details), and CBA's Digi Home Loan (details) and Macquarie's Basic loan (details) both at 6.09%. Rates change without notice, so treat these as a snapshot - you can see current rates compared on our site.
Meanwhile, plenty of back-book borrowers - especially those who settled three or more years ago and never asked for a review - are sitting on standard variable pricing of 6.7% or higher. If your rate starts with a 6.5 or worse, you are almost certainly overpaying.
The maths of switching
Let's put real numbers on it. Say you have $600,000 remaining with 25 years to run, currently at 6.70%. Refinancing to 6.09% changes the picture like this:
| Current loan | Refinanced loan | |
|---|---|---|
| Interest rate | 6.70% | 6.09% |
| Monthly repayment | ~$4,127 | ~$3,899 |
| Annual saving | - | ~$2,730 |
That's roughly $228 a month back in your pocket, or about $2,730 a year - and considerably more over the life of the loan if you keep repayments at the old level. Run your own figures with our repayment calculator.
Against that, the typical costs of switching are modest: a discharge fee from your current lender ($150-$400), government registration and discharge fees (roughly $300-$400 depending on your state), and sometimes an application or settlement fee at the new lender - though these are often waived, and many lenders run cashback or fee-free refinance offers. All up, most borrowers are looking at well under $1,000, which means the break-even point in our example arrives within a few months. Everything after that is pure saving.
Refinancing is about more than the rate
A sharper rate is usually the trigger, but a refinance is also a chance to restructure the whole loan:
- Cash-out for renovations. If your property has grown in value, you may be able to release equity to fund improvements without a separate personal loan.
- Debt consolidation. Rolling a car loan or credit cards into your mortgage can slash your monthly outgoings - but be honest with yourself here. Capitalising short-term debt over a 30-year term can cost more in total interest unless you commit to paying that portion down quickly.
- Adding an offset account. Moving from a basic loan to one with a genuine 100% offset can save meaningful interest if you hold savings or run your income through it.
- Fixing part of the loan. With another hike possibly landing in August, splitting your loan - part fixed for certainty, part variable for flexibility - is a popular hedge.
When refinancing is NOT the right move
Switching isn't always the answer. Think twice if:
- Your LVR has drifted above 80%. If property values have softened or you've drawn on equity, a new lender may require lenders mortgage insurance - even if you paid LMI the first time. That cost can wipe out years of rate savings.
- You're on a fixed rate. Break costs on a fixed loan can run into the thousands. Get the payout figure before you do anything.
- Your loan is near the end of its term. With a small balance and few years left, the interest saving may not cover the switching costs.
- Your credit position has changed. A new job in probation, reduced income or credit blemishes since your original approval can make requalifying harder than you'd expect.
In these cases, the smarter play is often a reprice with your current lender. This is the ask-first strategy we use constantly: as brokers, we can frequently negotiate a lower rate with your existing bank - no application, no discharge fees, no new paperwork. You'd be surprised how quickly a lender finds a better rate when they know a refinance is on the table.
The process and timeline
A well-run refinance through our refinancing service typically looks like this:
- Loan health check (day 1). We review your current rate, structure and goals, and request a reprice from your existing lender as a baseline.
- Comparison (days 2-7). We model the genuine cost of switching across our lender panel - rate, fees, cashbacks and features - not just the headline number.
- Application (weeks 1-3). We package and lodge the application and manage the valuation and approval.
- Settlement (weeks 3-6). The new lender pays out the old loan and your new repayments begin.
End to end, expect two to six weeks depending on the lenders involved. Documents you'll need: recent payslips (or financials if self-employed), your latest home loan and transaction account statements, ID, and a summary of any other debts and living expenses.
If you're not sure whether you're paying the loyalty tax, the easiest first step is a free loan assessment - it takes a few minutes and there's no obligation to switch.
This article is general information only and does not take your personal objectives, financial situation or needs into account. Example figures are illustrative estimates only; rates quoted were correct as at 4 July 2026 and change without notice. Consider whether refinancing is right for your circumstances and seek personal advice before acting. Emerald Financial, Australian Credit Licence 000 000.