Australian mortgages work differently enough from American ones that most refinancing advice you’ll find online doesn’t apply. Variable rates dominate here, fixed terms are short, and offset accounts do work that has no US equivalent.
The starting fact for 2026: the RBA raised the cash rate three times this year, 75 basis points in total, and held at 4.35% on 11 August while it assessed the effect. Australian borrowers are in a tightening cycle, not a loosening one.
Start with the loyalty tax, not the market
Before comparing lenders, do the cheaper thing first.
Australian lenders routinely advertise better rates to new customers than they charge existing ones. The gap is well known enough to have a name, and it means many borrowers can improve their rate without refinancing at all.
Call your lender and ask them to match their own new-customer rate. Mention that you’re comparing offers, because you are. This takes twenty minutes, costs nothing, and frequently produces most of the saving a full refinance would, minus the discharge fees, applications, or a new loan.
Do this even if you intend to move. A matched rate is your new baseline for comparison.
Then run the actual numbers
If you do refinance, the arithmetic is the same everywhere: total switching costs ÷ monthly saving = months to break even.
Australian switching costs typically include:
- Discharge fee from your existing lender
- Application, settlement or valuation fees at the new one
- Government registration charges on the mortgage
- Break costs if you’re exiting a fixed-rate period — these can be large and are the one people underestimate
Cashback offers from lenders can offset some of this. Read what they require, and check the ongoing rate rather than being bought by the upfront amount.
Two Australian features worth optimising
Offset accounts. Every dollar sitting in an offset reduces the balance interest is calculated on, while remaining accessible. For a borrower with a decent cash buffer, a loan with a proper offset can beat a slightly lower headline rate outright. Compare the whole package rather than the rate alone.
Short fixed terms. Fixed periods here are typically one to five years rather than the American thirty. That means a fixed rate is a medium-term decision, and there’s always a revert rate waiting at the end of it. Diarise that date the day you fix, because rolling onto a lender’s standard variable rate unnoticed is a common and expensive way to lose the benefit.
The LMI trap
Lenders Mortgage Insurance applies when your equity is below the lender’s threshold.
The catch on refinancing: LMI is generally not transferable between lenders. Refinance with thin equity and you may pay a fresh premium at the new lender — which can exceed the interest saving entirely.
If you’re close to the threshold, get your equity position clear before applying. Sometimes waiting a few months, or paying down a little more, changes the arithmetic completely.
Context, briefly
For readers comparing internationally: the US 30-year fixed averaged 6.67% in mid-August 2026, but the products aren’t comparable — a thirty-year fixed rate barely exists in Australia. Comparing headline numbers across the two markets isn’t meaningful. What does transfer is the method: the break-even calculation is identical wherever you are.
The order to work in
- Ask your current lender to match its new-customer rate. Free, fast, often most of the saving.
- Compare offers, including offset features and the revert rate, not just the headline.
- Total the switching costs, break costs included.
- Divide costs by monthly saving and compare against how long you’ll keep the loan.
- Check your equity position before applying, so LMI doesn’t ambush the result.
Ring your lender before you do anything else on this list. It’s the one step that costs nothing and often makes the rest of it unnecessary; when refinancing makes sense and the mortgage guide are there for whatever’s still worth chasing after that call.