Refinancing Is Up 16%. When Did You Last Check Whether Your Mortgage Is Still Competitive?

For many Australian homeowners, the instinct when mortgage repayments rise is to wait.

Wait for inflation to fall.

Wait for the Reserve Bank of Australia to cut rates.

Wait for the next monetary-policy meeting.

But Australia's mortgage market is showing why waiting for the RBA is not always the only option.

Mortgage stress has climbed to its highest level in 18 years, while borrowers are increasingly shopping around for better home-loan deals.

Roy Morgan estimates 32.5% of Australian owner-occupier mortgage holders were "At Risk" of mortgage stress in July 2026, up from 30.3% in June.

That represents approximately 1.786 million Australians, an increase of around 180,000 people in only one month.

At the same time, refinancing is picking up.

Loan Market reported that its refinancing activity increased 16% year-on-year during August, according to recent reporting on borrower behaviour.

And lenders appear increasingly willing to compete for borrowers.

Canstar's latest rate tracking shows 35 lenders have cut variable rates for new customers since 1 June, while 52 lenders now offer at least one variable home-loan rate below 6%.

That creates an important message for mortgage holders:

Your existing lender's rate is not necessarily the only rate available to you.

Australia's Mortgage Market in Numbers

Roy Morgan says mortgage stress has increased for six consecutive months, while the RBA's cash rate currently stands at 4.35% after three increases during 2026.

But those figures need some context.

What Does "Mortgage Stress" Actually Mean?

The 32.5% figure does not mean almost one-third of Australian mortgage holders are missing repayments.

That distinction is important.

Roy Morgan classifies borrowers as "At Risk" when mortgage repayments exceed a certain proportion of after-tax household income, with the threshold varying according to income and spending.

It separately classifies borrowers as "Extremely At Risk" when even the interest-only cost exceeds a specified proportion of household income.

In July, approximately 22% of mortgage holders, or 1.21 million people, were considered Extremely At Risk.

Mortgage stress is therefore a measure of financial pressure and vulnerability, not mortgage delinquency.

And actual arrears tell a less alarming story.

The RBA's March Financial Stability Review reported that housing-loan arrears remained low and had declined over the previous year, with loans more than three months overdue returning to around pre-pandemic levels.

Both things can be true at once:

Households can be under increasing financial pressure while still managing to make their repayments.

That may mean cutting discretionary spending, drawing down savings, working additional hours, or looking for ways to reduce the cost of their mortgage.

Refinancing is one of those responses.

Why Mortgage Stress Has Risen So Quickly

According to Roy Morgan, the proportion of mortgage holders considered at risk increased from 30.3% in June to 32.5% in July.

That is a 2.2 percentage-point increase in one month.

Several factors are contributing.

Higher interest rates

The RBA increased the cash rate three times during the first part of 2026, lifting it by a combined 0.75 percentage points to 4.35%.

For borrowers with variable-rate mortgages, higher rates generally translate into higher repayments.

Household incomes are under pressure

Roy Morgan also points to softer labour-market conditions, particularly weaker full-time employment, as another factor affecting household incomes.

Mortgage stress is ultimately a relationship between income and expenses.

If mortgage repayments rise while household income stagnates or falls, that relationship deteriorates quickly.

Cost-of-living pressure remains

Mortgage repayments are not the only expense households need to manage.

Energy, insurance, groceries, transport, childcare and other essential costs also compete for the same household income.

This is why even borrowers who remain completely up to date with their mortgage can still feel significant financial pressure.

Borrowers Are Responding by Refinancing

One of the more interesting developments is what homeowners are actually doing about it.

Loan Market reported 16% year-on-year growth in refinancing activity during August.

This suggests more borrowers are actively asking:

Could I be paying less somewhere else?

That question becomes particularly relevant when lenders start competing aggressively for a smaller number of new customers.

New home-loan demand has weakened.

The ABS reported the number of new dwelling loan commitments fell 5.4% in the June quarter, while the value of those commitments declined 5.2%.

When fewer people are taking out new mortgages, lenders still need customers.

Existing borrowers looking to refinance therefore become particularly valuable.

A Mortgage Rate War Is Developing Beneath the RBA Headlines

This is one of the most useful things for borrowers to understand.

The RBA can leave the cash rate unchanged while individual lenders cut selected mortgage rates.

That is exactly what has been happening.

Canstar reports that since the beginning of June:

35 lenders have cut new-customer variable rates.

The number of lenders offering at least one variable rate below 6% has increased from 38 to 52.

Some advertised rates now start from around 5.69%, depending on loan-to-value ratio and other eligibility requirements.

That means competition between lenders is partially moving independently of the RBA.

A borrower does not necessarily need an official cash-rate cut to potentially access a lower mortgage rate.

Why Would Banks Cut Rates When the RBA Hasn't?

Because banks compete.

Mortgage pricing reflects more than just the official cash rate.

Lenders consider:

• funding costs

• deposit costs

• wholesale funding conditions

• credit risk

• loan-to-value ratio

• customer acquisition targets

• market share

• competitor pricing

• borrower profile

• loan size

If a lender wants more owner-occupier loans, it may sharpen rates for new customers even if the RBA has made no change.

There is evidence this competition is already affecting market share.

Canstar's analysis of ABS data shows Australia's major banks accounted for 69.6% of new loan commitments in the June 2026 quarter, excluding refinances, down from 72.7% a year earlier.

Meanwhile, non-bank lenders increased their share from 6.9% to 10.7%.

Borrowers have more than four major banks to choose from.

That competition can matter.

How Much Difference Can a Lower Mortgage Rate Actually Make?

Even what looks like a small rate difference can become meaningful on a large mortgage.

Consider a simplified example.

Imagine a borrower with:

Loan balance: $600,000
Remaining term: 25 years
Current rate: 6.50%

The approximate principal-and-interest repayment would be around $4,051 per month.

If the borrower qualified for a rate of 5.99%, the equivalent repayment would be approximately $3,862 per month.

That's roughly:

$189 less per month

or around:

$2,269 per year

before considering refinancing fees, discharge costs, package fees, loan features or changes to the loan term.

This is only an illustrative calculation, not a quote.

But it demonstrates why a difference of half a percentage point can matter when applied to hundreds of thousands of dollars of debt.

Even a 0.25% Difference Can Matter

Using the same hypothetical $600,000 loan over 25 years:

At 6.50%, repayments would be approximately $4,051 per month.

At 6.25%, they would be approximately $3,958.

That's around $93 per month, or more than $1,100 per year.

Again, whether refinancing actually makes financial sense depends on the costs involved.

But dismissing a rate difference because it appears small can be expensive over time.

When Did You Last Review Your Mortgage?

This is perhaps the most practical question for homeowners.

Many Australians spend hours comparing:

insurance policies, electricity plans, mobile contracts and streaming subscriptions.

Yet the mortgage is often the largest recurring financial commitment a household will ever have.

A homeowner who has not reviewed their loan for several years may be paying a rate that is no longer particularly competitive.

A mortgage review can examine:

• your current interest rate

• current loan balance

• remaining loan term

• repayments

• available equity

• loan-to-value ratio

• offset facilities

• redraw facilities

• annual fees

• fixed versus variable structure

• alternative lender options

Sometimes refinancing makes sense.

Sometimes asking the current lender for a better rate may be enough.

And sometimes staying where you are is still the better decision.

The point is to know rather than assume.

You Don't Necessarily Need to Leave Your Bank

A mortgage review does not automatically mean refinancing.

Before changing lenders, borrowers may consider asking their existing lender whether a better rate is available.

If competing lenders are offering more attractive pricing, the current lender may be willing to negotiate.

Potential advantages of staying with the existing lender can include avoiding:

• discharge fees

• new application processes

• property valuation delays

• mortgage registration costs

• changes to account arrangements

But there is no guarantee the existing lender will match another offer.

That is where comparing the numbers becomes important.

When Refinancing May Make Sense

There are several reasons Australians refinance.

To obtain a lower interest rate

This is the obvious one.

A lower rate may reduce repayments, reduce total interest or allow borrowers to keep repayments unchanged and repay the loan faster.

To access different features

A borrower may want:

• an offset account

• additional offset accounts

• better online banking

• redraw

• split loan options

• flexible repayments

To consolidate debt

Some borrowers refinance to consolidate higher-interest personal debt.

This needs careful consideration.

Moving short-term debt into a 25 or 30-year mortgage can reduce monthly repayments but may increase the total amount of interest paid if the debt remains outstanding for much longer.

To restructure the loan

Life changes.

Borrowers may want to move between fixed and variable lending, restructure investment and owner-occupied debt, or change repayment arrangements.

To access equity

Home equity may potentially be used for renovation, investment or other purposes, subject to lender assessment.

When Refinancing May NOT Make Sense

A cheaper advertised rate does not automatically mean a better financial outcome.

Borrowers should consider the total cost.

Possible expenses include:

• discharge fees

• application fees

• valuation costs

• government registration charges

• annual package fees

• break costs on fixed-rate loans

Loan term matters too.

Suppose you have 20 years remaining on your mortgage and refinance into a new 30-year loan.

Your monthly repayment may fall substantially.

But stretching the debt across another decade could significantly increase total lifetime interest.

A fair refinance comparison should therefore examine both:

monthly cash-flow savings

and

total long-term loan cost.

Property Values Can Affect Refinancing Options

Australia's recent housing downturn adds another complication.

A borrower may have secured their current mortgage when their property was worth more than it is today.

When refinancing, the new lender will generally assess the property's current value.

If the loan represents a high percentage of the property's value, lender options may be reduced.

In some situations, lenders mortgage insurance or other restrictions could apply.

This means borrowers with substantial equity may have more flexibility than borrowers who purchased recently with a small deposit.

Your Loan-to-Value Ratio Can Affect the Rate You Receive

Many of the lowest advertised home-loan rates come with LVR requirements.

Canstar's current comparison shows the lowest tracked variable rate beginning around 5.69%, but that rate requires a substantial 40% deposit or equivalent equity.

Other sub-6% products are available at higher LVRs, but borrower eligibility and product conditions vary.

This is why advertisements saying "rates from 5.xx%" should be treated as starting points, not guarantees.

Your actual rate can depend on:

• LVR

• loan amount

• property type

• owner-occupier or investment purpose

• principal-and-interest or interest-only repayments

• credit history

• lender policy

The Lowest Interest Rate Is Not Always the Best Loan

Mortgage comparison should not stop at one number.

Consider two loans.

Loan A may have a slightly lower rate but no offset account.

Loan B may cost slightly more but provide a 100% offset that suits a borrower who keeps substantial savings available.

Depending on the borrower's circumstances, Loan B could produce the better overall financial outcome.

Borrowers should compare:

interest rate + fees + features + flexibility + total cost

rather than simply chasing the lowest advertised headline rate.

Why Mortgage Brokers Become Particularly Useful in a Rate War

When dozens of lenders are changing rates independently, mortgage comparison becomes more complicated.

Different lenders also use different servicing policies.

A mortgage broker can compare options across multiple lenders and help borrowers understand:

• current market rates

• refinance costs

• borrowing capacity

• equity position

• lender policy

• repayment differences

• available loan features

For some borrowers, the result may be refinancing.

For others, the information may provide leverage to negotiate with their existing bank.

Either way, knowing what the broader market offers can be useful.

Mortgage Stress Is Not the Same as Mortgage Failure

The latest numbers require perspective.

A 32.5% mortgage-stress reading is significant, particularly because it is the highest Roy Morgan has recorded in 18 years.

But it does not mean Australia's mortgage system is experiencing GFC-style defaults.

RBA data shows housing arrears remain relatively low.

The more useful interpretation may be that a growing share of households have less financial breathing room.

That can influence behaviour long before borrowers actually miss payments.

Households may:

• cut discretionary spending

• postpone purchases

• reduce savings

• seek additional work

• renegotiate bills

• refinance mortgages

The 16% increase in refinancing activity is therefore particularly relevant.

It suggests borrowers are actively trying to reduce pressure rather than simply waiting.

Should You Wait for the September RBA Decision?

The RBA's cash rate currently stands at 4.35%, and the next monetary-policy decision is due on 29 September 2026.

Some borrowers may be tempted to wait.

But there is no rule saying a mortgage review must happen after an RBA meeting.

Lenders can:

• increase rates out of cycle

• reduce selected rates

• introduce new products

• change discounts

• alter lending criteria

at any time.

That is exactly why Canstar can record 35 lenders cutting selected new-customer rates while the official cash rate remains unchanged.

You can review your mortgage now and still reassess your options later.

A Useful Mortgage Health Check

If you haven't reviewed your mortgage recently, consider answering these questions:

1. What rate am I currently paying?

Don't guess. Check your loan statement or banking app.

2. What is my outstanding balance?

This affects potential savings and your LVR.

3. How much is my property currently worth?

Your equity position can influence lender options.

4. What features am I paying for?

Are you actually using the offset, redraw or package benefits?

5. Is my lender offering new customers a better rate?

Existing and new-customer pricing can differ.

6. What would refinancing cost?

Compare the savings against all switching costs.

7. How long do I plan to keep the property and loan?

A refinance that takes several years to break even may not make sense if you plan to sell soon.

The Bigger Lesson From Australia's Refinancing Surge

The most important message from the latest mortgage data is not simply that households are under pressure.

It is that borrowers are responding.

Mortgage stress has risen to 32.5%, or approximately 1.79 million Australians.

Loan Market says refinancing activity increased 16% year-on-year in August.

And lender competition has intensified, with 35 lenders cutting selected variable rates since June and 52 lenders now advertising at least one variable rate below 6%.

Those trends are connected.

When household budgets tighten, borrowers become more price-sensitive.

When mortgage demand slows, lenders compete harder for the borrowers who remain.

That competition can create opportunities.

The question is whether your existing mortgage is still competitive enough to take advantage of them.

When Did You Last Review Your Home Loan?

At Loan & Own Mortgages, we help Australian homeowners compare their existing home loan against current lending options.

A mortgage review can help you understand whether your current interest rate, loan structure and features still suit your circumstances and whether refinancing could potentially improve your position.

You don't necessarily need to wait for the next RBA announcement.

Sometimes the most useful question is simply:

What is available to me today?

Speak with Loan & Own Mortgages to review your current mortgage and refinancing options.

Data sources

Roy Morgan, Mortgage Stress Risk, July 2026
Roy Morgan estimates 32.5% of owner-occupier mortgage holders, approximately 1.786 million Australians, were "At Risk" of mortgage stress in July. The figure increased 2.2 percentage points from June and is the highest recorded in 18 years.

Loan Market refinancing data, reported September 2026
Loan Market reported refinancing activity increased approximately 16% year-on-year during August as borrowers sought lower rates and different lending arrangements.

Canstar mortgage-rate tracking
Canstar reports 35 lenders have cut new-customer variable rates since 1 June, while 52 lenders now offer at least one variable rate under 6%. Advertised rates currently begin from approximately 5.69%, subject to eligibility and LVR requirements.

Reserve Bank of Australia
The cash-rate target is currently 4.35%, with the next monetary-policy update scheduled for 29 September 2026.

RBA Financial Stability Review, March 2026
The RBA reported that housing-loan arrears remained low and had declined over the previous year, providing important context when interpreting mortgage-stress estimates.

Australian Bureau of Statistics, Lending Indicators, June Quarter 2026
The number of new home-loan commitments fell 5.4% during the June quarter and the value fell 5.2%, highlighting weaker new-borrower activity as lenders compete for business.

The repayment examples in this article are illustrative only and assume principal-and-interest repayments with no fees or changes to the loan term. This article contains general information and does not constitute personal financial, credit, tax or legal advice. Refinancing suitability, rates, fees and borrowing capacity depend on individual circumstances and lender assessment.