Record levels of mortgage refinancing have been one of the biggest changes in the home loan market in 2026 in Australia. Homeowners aren’t loyal to one bank for life anymore; they’re actively shopping rates, comparing lenders and switching loans to save money or get more flexibility.

This trend is being driven by a confluence of high interest rates, aggressive lender competition, cashback offers and rising financial pressure on households.

1. Record levels of refinancing in Australia

Refinancing activity has exploded to record highs over the last year.

Main market data:

• Over 640,000+ mortgages were refinanced in 2025, a huge increase from the previous year
• Nearly two-thirds of borrowers are moving to new lenders rather than sticking with their current bank
• Competition and rate shopping have made refinancing a big part of total mortgage activity

What this means:

Australians are now actively and regularly using their mortgage as a tool of optimisation and not as a ‘set and forget’ product.

2. The root cause: Interest rate pressure

The main reason to refinance is simple: to save money on repayments.

Why rates are so important:

• Even a small difference in interest rates can save thousands over the life of a loan
• Households are re-checking loans because of high repayment pressure
• Some borrowers are finding significantly cheaper deals with new lenders

Key behaviour change:

Borrowers are no longer simply accepting their bank’s rate — they are comparing it across the entire market.

3. Switch boom powered by cashback offers

Lenders are aggressively fighting for new customers with cashback incentives.

What’s happening:

• Cash bonuses for refinancing (usually $1,000–$3,000+)
• Reduced upfront switching costs
• Discounted “new customer” interest rates

The catch:

Borrowers are being warned that:

• Some loans may have higher long-term interest rates
• Fees and costs can reduce real benefits
• Frequent switching can reset loan terms and increase total interest paid

Main point:

Cashback is a perk, but it shouldn’t be the only factor when changing lenders.

4. Lenders are competing heavily now

The Australian mortgage market is now highly competitive.

What lenders are doing:

• Big banks offer discounts to retain customers
• Non-bank lenders target rejected or frustrated borrowers
• Digital banks compete on low rates and speed
• Brokers enable fast switching between lenders

Many lenders now actively counter-offer when customers signal they are leaving.

Main point:

Lenders are fighting harder than ever to retain or attract customers.

5. More borrowers are switching rather than staying loyal

A fall in loyalty is one of the biggest cultural shifts in Australia’s mortgage market.

Why this is happening:

• Easier access to comparison tools and brokers
• Greater rate transparency online
• Rising cost of living pressure
• Awareness of the “loyalty tax” (higher rates for existing customers)

Borrowers are increasingly:

• Moving between banks
• Using brokers to secure better deals

6. Many borrowers are sticking with their lender (but negotiating hard)

Interestingly, refinancing doesn’t always mean switching.

Data shows:

• More borrowers are negotiating better deals with their existing bank
• Banks are retaining customers with improved rates at the last stage

Two main strategies now:

• Refinancing for a better deal
• Staying and renegotiating aggressively

Both approaches are widely used.

7. Refinancing costs still a key factor

Switching can cost money, even if it saves money long-term.

Typical costs include:

• Exit or discharge fees
• New loan application fees
• Property valuation fees
• Legal and settlement costs

These can range from a few hundred to a few thousand dollars depending on the lender.

Main point:

Refinancing only makes sense if long-term savings outweigh switching costs.

8. Why refinancing will probably remain strong

Several structural factors point to continued refinancing activity:

• Ongoing interest rate uncertainty
• Strong lender competition
• Better digital comparison tools
• Increased financial awareness among borrowers
• More flexible loan products

Even if rates stabilise, borrowers are now more proactive about managing their loans.

Conclusion

Mortgage refinancing in Australia has moved from a niche financial decision to a mainstream financial strategy.

Key drivers:

• High interest rate environment
• Lender cashback incentives
• Strong competition between banks and non-bank lenders
• Increased awareness of better deals in the market

In 2026, the reality is simple:
Sticking with your lender without checking your rate could mean paying more than necessary.

Refinancing is no longer just about switching banks — it’s about actively managing your mortgage as a financial asset.