Rising living costs and a changing interest rate environment are pushing many Australian homeowners to take action. The latest industry data shows a clear trend: a growing number of borrowers are refinancing their home loans in search of better rates and more manageable repayments. But what’s behind this movement, and what should borrowers consider before making the switch?
Refinancing Activity Hits New Highs
According to the Australian Bureau of Statistics, external owner-occupier refinancing jumped by 12% in the final quarter of 2024 compared to the previous quarter. This increase reflects a broader shift in borrower behaviour, as homeowners seek to reduce monthly repayments and escape higher interest rates locked in during previous loan terms.
This surge is supported by positive sentiment: over 80% of borrowers now feel either optimistic or neutral about their financial outlook, according to research from the Mortgage & Finance Association of Australia (MFAA).
Why Are More People Refinancing Now?
Several factors are driving the refinancing wave:
- RBA rate movements: Earlier this year, the Reserve Bank of Australia paused and then slightly eased the cash rate, which signalled to many borrowers that now is a good time to act.
- Lower refinancing hurdles: Lenders can now apply a reduced 1% serviceability buffer (instead of the standard 3%) for simple, like-for-like refinances. This regulatory change makes it easier for some borrowers to qualify for a refinance.
- Desire to beat the “loyalty tax”: Borrowers are realising that staying with the same lender doesn’t always pay off. New customers often receive more competitive rates than existing ones.
Mortgage Stress Is Easing – But Not for Everyone
While mortgage stress has decreased—falling from 49% to 24% of brokers reporting high levels of client stress over the past year—it hasn’t disappeared. Some borrowers, despite steady income and good repayment history, still struggle to refinance due to tight lending standards.
These borrowers often find themselves in “mortgage prison,” where they can’t qualify for a new loan even though it could lower their repayments. That’s why understanding your options—and getting professional advice—is more important than ever.
Mortgage Brokers Are in High Demand
With lending conditions varying across banks and non-bank lenders, navigating the refinancing process can be overwhelming. This is where mortgage brokers play a vital role. They can:
- Compare interest rates and loan features across multiple lenders
- Assess borrowing capacity under new rules
- Advocate for better deals with current or new lenders
- Help first-time refinancers understand the process
As the market becomes more complex, more borrowers are seeking out broker support to make informed decisions.
Is Now the Right Time to Refinance?
Refinancing isn’t for everyone, but for many Australians, it’s a smart financial move—especially in today’s rate environment. If your current home loan is more than two years old or your financial circumstances have changed, it may be worth reviewing your loan with the help of a professional.
By understanding the current trends and taking advantage of the latest lending changes, you can reduce your repayments, gain more flexibility, and regain control of your financial future.
Whether your fixed rate is ending soon, your circumstances have changed, or you simply want to see if there’s a better deal out there—we’re here to help.
Book your free home loan review today and let’s see what refinancing options are available for you.