The RBA has hiked three times in 2026. The cash rate now sits at 4.35%, and the Big 4 standard variable rates range from 7.94% to 8.24%. Meanwhile, the cheapest non-bank variable loans are sitting around 5.69%.
If you took out your loan more than three years ago and have not refinanced, you are almost certainly paying more than you need to. The loyalty gap for long-term borrowers has stretched to between 0.8% and 1.5% above current market rates. On a $600,000 loan, that is between $4,800 and $9,000 per year in excess interest. Most people do not refinance because the process feels complicated. It is not. Here is how to do it in six steps.
Log into your banking app or pull out your last loan statement. You want the current interest rate, not the rate you started with. Banks adjust variable rates with every RBA move, and they do not always shout about it. The rate is usually listed on the home loan summary screen or on your monthly statement under "interest rate" or "annual percentage rate".
The average outstanding loan rate across Australian mortgages right now is around 7.10%. If you are above that, you are already in territory where refinancing deserves serious attention.
Once you have your rate, compare it to the best available rate for your situation. The maths is straightforward. On a $600,000 loan balance:
A 0.5% rate difference costs roughly $3,000 per year. A 1.0% difference costs roughly $6,000 per year. A 1.5% difference, which is within the range of what long-term borrowers are experiencing right now, costs around $9,000 per year.
Use Centza's mortgage rate checker to benchmark your current rate against what is available in the market before you do anything else. It takes two minutes and gives you a concrete number to work with when you call your bank.
Your loan-to-value ratio (LVR) determines which products you can access. Take your current loan balance and divide it by your property's current value. If that figure is above 80%, most lenders will require you to pay Lenders Mortgage Insurance (LMI) to refinance, which can add thousands to the cost and often kills the economics of the switch.
If your LVR is below 80%, the full market is available to you and you are in the strongest negotiating position. If you bought with a small deposit and your property has not grown much in value, check this figure first before spending time on applications.
The cheapest variable rates in Australia consistently come from non-bank lenders. As of May 2026, lenders like Unloan, Reduce Home Loans and MOVE Bank are offering variable rates around 5.69% (comparison rate approximately 5.79%). That is more than 2% below the Big 4 standard variable.
RateCity and Canstar are useful starting points for a rate table. But always go direct to the lender's website for the final quote, as aggregator listings can lag by a few weeks. What you see on a comparison site is a floor, not the exact number you will be offered.
Also worth knowing: 77% of new mortgages in Australia go through mortgage brokers. A broker costs you nothing as a borrower because the lender pays the commission. If you want someone to do the legwork and present multiple options, a broker is a reasonable path. The downside is that brokers have accreditation limits and will not always show you every lender on the market.
Once you have identified a rate worth moving to, the application process typically takes one to three weeks. Most lenders waive application fees to win your business. You will pay a discharge fee to your current lender, which is usually between $150 and $400. Some lenders also charge a settlement fee on the new loan side, but competitive lenders are increasingly absorbing this.
Total all-in refinancing costs are typically $500 to $1,500 for straightforward owner-occupier loans. Fixed-rate loans are a different story as break costs can be substantial, so check that figure separately before proceeding.
Before you finalise anything, confirm the numbers add up. Take your total switching cost and divide it by your annual saving.
If refinancing saves you $3,000 per year and costs you $1,200 to switch, you break even in under five months. After that, you are ahead by $3,000 every year you stay on the new loan. Even in a scenario where savings are more modest, say $1,500 per year with $1,200 in costs, you are still ahead within ten months.
The only scenario where refinancing does not make sense is if you are very close to paying off the loan, you are locked into a fixed rate with high break costs, or you are planning to sell within the next six months.
Call your current lender first. Banks will often match or beat a competing offer when they know you are serious about leaving. You will not get their best rate just by asking, but show them a specific competing offer and the conversation changes. This takes 20 minutes and costs nothing. Even saving 0.3% without switching is worth the call.
The core point is this: in the current environment, with the loyalty gap at historic highs and non-bank lenders pricing aggressively, sitting on the same loan you took out three or more years ago is a choice that costs real money every month. The process to fix it is not complicated. The hardest part is just starting.
See how your rate compares to the best available in 2 minutes. No sign-up, no broker calls.
Check Your Mortgage Rate Free