$9,000. That is what some Australian households will pay extra on their mortgage in 2026 compared to two years ago, according to new projections. The RBA raised rates twice this year — to 4.10% — and major banks have passed every basis point on. But here is what the banks are not advertising: challenger lenders are offering variable rates from 5.08%, and some are handing out up to $10,000 in cashback just to win your business.
Refinancing is not right for everyone. But if your current rate is 6% or above and you have not switched lenders in the last three years, the maths almost certainly favours making a move.
Is Now the Right Time to Refinance?
Refinancing makes financial sense when the rate difference between your current loan and the best available rate is at least 0.5% per annum. Below that threshold, fees and time costs often eat the saving.
Three signals that you should be actively refinancing right now:
- Your rate starts with a 6 or higher. Major bank standard variable rates averaged 6.2–6.5% in April 2026. Challenger lenders are at 5.08–5.49%.
- You have been with your lender for 3+ years. Loyalty rarely pays in Australian banking — new customers typically get 0.3–0.7% better rates than existing ones.
- Your fixed rate is expiring. Thousands of Australians locked in 2–3 year fixed rates at 1.9–2.5% in 2021–22. Those terms are ending now, rolling onto revert rates of 6%+.
"When the RBA moves, banks typically increase variable mortgage rates by the same amount — and both the February and March 2026 hikes were passed on in full by all major banks."— RBA Statement on Monetary Policy, March 2026
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What About Fixed Rate Break Costs?
If you are on a fixed rate loan, your lender can charge a break cost — sometimes called an "early repayment adjustment" — when you leave before the term ends. These costs are calculated based on the difference between your fixed rate and the current wholesale rate for that term.
Here is the good news: because market rates in 2026 are higher than when most 2021–22 fixed loans were written, break costs have collapsed. Many borrowers on fixed rates from that era face zero break cost or less than $500. Always call your lender and request a break cost quote — it takes five minutes and the answer may surprise you.
Live Cashback Offers: May 2026
Lenders are competing hard for refinancers right now. Here are the confirmed live offers as at May 2026:
| Lender | Cashback / Offer | Minimum Loan | Max LVR | Expiry |
|---|---|---|---|---|
| ME Bank | $3,000 cashback | $700,000 | 80% | 28 Aug 2026 |
| BOQ | Up to $2,000 cashback | $400,000 | 80% | 120 days from application |
| Reduce Home Loans | $2,000–$10,000 tiered | $250,000 | 80% | Check lender |
| CommBank | Up to 300,000 Qantas Points | $300,000 | 80% | 30 Jun 2026 |
Important: Most cashback loans require you to keep the loan for at least 24 months or repay the cashback on discharge. Factor this into your break-even calculation — not just the upfront saving.
How to Calculate Your Break-Even Point
The break-even point tells you how many months it takes for your rate saving to outweigh the cost of switching. Here is the formula:
Break-even (months) = Total switching costs ÷ Monthly saving
Example: Jake has a $600,000 loan at 6.4%. He is offered 5.9% at a new lender. Monthly saving: approximately $250. Switching costs (discharge + application + valuation): $1,200. His cashback: $2,000. Net gain after costs: $800. Break-even: 0 months — he is ahead from day one, plus $250 per month ongoing.
Step-by-Step: How to Refinance in Australia
- Know your current rate and LVR. Check your latest statement or call your lender. Your LVR (loan-to-value ratio) determines which products you can access — below 80% unlocks the best rates and cashback deals.
- Compare rates using a reputable aggregator. Canstar, Finder, and Savings.com.au all publish live rate tables. Filter by your LVR and loan size. Look at the comparison rate, not just the advertised rate — it includes fees.
- Request a break cost quote from your current lender. Do this before applying anywhere. If you are on a fixed rate, the break cost might be lower than you expect.
- Apply to 1–2 lenders maximum. Each application triggers a credit enquiry. Multiple enquiries in a short period can lower your credit score. Choose carefully, then apply.
- Provide documentation. Recent payslips (2–3 months), last 2 years tax returns if self-employed, 3 months bank statements, council rates notice, current loan statements.
- Settlement. Your new lender coordinates the payout of your old loan and registers the new mortgage. You do not need to do anything — it happens automatically.
What the Banks Won't Tell You
Before you sign with a new lender, try calling your current bank's retention team (not the regular service line). Tell them you are about to refinance and have a better offer. Retention teams have authority to offer rate discounts of 0.2–0.6% without you switching at all — saving the paperwork entirely.
Example: Priya has been with her bank for 8 years on a $520,000 loan at 6.3%. She called the retention team armed with a competitor quote at 5.7%. Her bank matched it to 5.75%. She saved $3,276 per year without a single form.
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Calculate My Saving → Free · No account needed · 100% privateStep-by-step guide to comparing lender rates, calculating break costs, understanding cashback offers, and running the numbers on whether refinancing saves money at your balance.
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Shop on Amazon AU →Frequently Asked Questions
Is it worth refinancing in 2026 with rates still rising?
Yes — if your current rate is 0.5% or more above the best available rate, refinancing can save $3,000–$12,000 annually on a $600,000 loan even after closing costs. Challenger banks are offering variable rates from 5.08% as of May 2026, compared to major bank averages of 6.2–6.5%.
What are break costs on fixed rate home loans in Australia?
Break costs are calculated based on the difference between your fixed rate and the current wholesale rate, multiplied by your remaining balance and time. Because market rates in 2026 are higher than in 2021–22, many borrowers from that era face zero or very low break costs. Always request a quote from your lender before deciding.
Which lenders offer cashback on refinancing in 2026?
As of May 2026: ME Bank ($3,000 on loans ≥$700K), BOQ (up to $2,000 on loans ≥$400K), Reduce Home Loans ($2,000–$10,000 tiered by loan size), and CommBank (up to 300,000 Qantas Points on loans ≥$300K). All require LVR ≤80% and have loan retention periods of 24 months.
How long does refinancing take in Australia?
Refinancing typically takes 4–8 weeks from application to settlement. Digital lenders can be faster, sometimes 2–3 weeks. The process covers application, credit assessment, property valuation, and discharge of your existing mortgage.
What fees are involved in refinancing a home loan?
Typical fees: discharge fee $150–$400, application fee $0–$600 (many lenders waive this for refinancers), settlement fee $100–$300, and property valuation $0–$600. On loans above $400,000, cashback offers typically exceed total fees, leaving the borrower in a net positive position from day one.