18 Banks Cut Rates. Should You Refinance Your Home Loan?

If you haven't checked whether you could refinance your home loan this year, the maths has shifted underneath you. The Reserve Bank has left the cash rate parked at 4.35% since its May increase, and the big four now tip no relief until 2027. Yet 18 lenders have quietly trimmed their advertised variable rates anyway, according to Canstar. Almost none of those cuts land automatically on an existing customer's statement.

The size of the gap is the part worth sitting with. Canstar's mid-year count had the sharpest variable rate on the market at 5.69%, with 15 lenders advertising under 5.90%. Finder put the average variable rate paid by Australian borrowers at roughly 6.92% in July. That's a spread of more than 1.2 percentage points between the best price on the shelf and what a typical household is handing over.

All of this is happening while the property market cools. Cotality's national index recorded a 0.7% fall in home values through July, the steepest single month since December 2022, with Sydney leading the decline and Melbourne close behind. Perth, Adelaide and Brisbane are still holding up. Softer prices change the refinancing calculation in ways most borrowers don't see coming.

Why Are Lenders Cutting While the RBA Sits Still?

Because a flat cash rate doesn't mean a flat market. With new lending volumes shrinking, banks are fighting harder over a smaller pool of borrowers. Fixed rates have moved too: five lenders cut fixed pricing by an average of 0.22 percentage points, with AMP going as deep as 0.50. Canstar reads these moves as competition for new business, not a signal that the RBA is about to blink.

Competition among lenders continues to create opportunities for some households to cut their borrowing costs. Negotiating with your lender can get you on your way, but the bigger gains still typically come from refinancing. — Sally Tindall, Canstar data insights director

The Loyalty Tax, Counted in Dollars

Percentages are easy to shrug off, so run them through a real loan. Take $600,000 over 25 years. At 6.92%, the monthly repayment is about $4,210. At 5.69%, it drops to roughly $3,753. That's a difference of around $457 a month, or close to $5,480 a year — for the same house, the same debt, the same borrower.

Scale it up and it gets worse. The ABS put the average new owner-occupier loan at $731,000 nationally in the June quarter, and $751,000 in Queensland. On a balance that size, the same rate gap is worth well over $6,500 a year. The longer you've held the loan without asking, the more you've paid for the privilege.

When It's Worth Trying to Refinance Your Home Loan

Switching isn't free and it isn't always worth it. The honest test is whether the annual saving comfortably clears the cost of moving, with room to spare. Three checks will tell you inside an afternoon.

Find Your Actual Rate, Not the One You Remember

It's printed on your latest statement or sitting in your banking app. Compare it against what your own lender is currently advertising to new customers. If your number is higher — and for most people who haven't asked in two years, it will be — you've found your loyalty tax in about ninety seconds.

Add Up What Switching Actually Costs

• Discharge fee from your current lender, typically a few hundred dollars
• State government mortgage registration and title fees
• Application or settlement fees at the new bank, sometimes waived
• Break costs, which apply only if you're inside a fixed term
• Lenders mortgage insurance, if your equity has slipped under 20%

Ring Your Own Bank Before You Leave

Retention teams exist for a reason. Tell them the rate you've been quoted elsewhere and ask them to match it. A phone call costs nothing and often recovers a chunk of the gap immediately. If they won't move, you've lost an afternoon and gained a genuine reason to walk.

Falling Prices Can Cost You the Deal

Here's the trap. A new lender revalues your property, and in a softening market that valuation can land below what you assumed. If the fall pushes your loan above 80% of the property's value, you may be quoted a worse rate or asked to pay mortgage insurance again — enough to wipe out the saving entirely.

Recent buyers in Sydney and Melbourne are most exposed, since those are the markets shedding value fastest. Owners in Perth, Adelaide and Brisbane, where values are still rising, are more likely to find they have more equity than they thought. Either way, get an indicative valuation before you lodge a full application.

What to Watch Between Now and 2027

Refinancing volumes have already come off the boil. ABS figures released on 14 August showed owner-occupier external refinancing down 0.9% by number and 2.8% by value in the June quarter, after owner-occupiers switched a record $42.9 billion across 66,617 loans in the March quarter. Fewer people are asking — which is precisely when lenders stop working for your business.

Don't wait for the Reserve Bank. CBA and ANZ both forecast two cuts in 2027, and NAB expects gradual easing from the second quarter of that year, which is a long time to overpay. Pull out your last statement this week, compare your rate against the sub-5.90% deals on offer, and either negotiate it down or refinance your home loan while lenders are still competing this hard.