Refinancing ramps up following February rate cut

The number of mortgage holders switching lenders ramped up in the March quarter to the highest level since September 2023, data from the ABS released today shows.

Almost 100,000 loans were refinanced in the first three months of the year according to the ABS Lending Indicators data, in seasonally adjusted terms.

Our analysis of the ABS data over the three years since the start of the cash rate hikes shows more than one million mortgages have switched to a new lender.

This includes some borrowers that have potentially refinanced more than once, as well as some borrowers with more than one loan.

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Source: Canstar. Notes: number of refinanced loans includes owner-occupier and investor loans, seasonally adjusted data. Total since the start of the hikes is an estimation from May 2022 to March 2025 inclusive.

Borrowers should not be waiting for the RBA to make the switch

Although some borrowers might hope that the RBA’s May meeting will bring additional rate relief, there’s no certainty that a cash rate cut will happen next week.

Rather than relying solely on the Board’s decision, borrowers should take matters into their own hands and turn the potential for a rate cut into a reality by taking action themselves.

Our research shows a borrower with a $600,000 loan today and 25 years remaining could potentially save more than $12,000 over the next two years by switching to a competitive rate of 5.75%, even after factoring in estimated switch costs of $1,150.

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Source: Canstar. Notes: calculations are estimates based on an owner occupier paying principal and interest with a $600k debt and 25 years remaining in June 2025. The complacent variable borrower rate assumes the person has not renegotiated their rate since the start of the rate hikes in May 2022. Costs include $1,150 in switch costs (estimated discharge fees, state govt fees and upfront fees) but not ongoing fees. Calculations assume variable rates change in line with CBA’s current cash rate forecast and that banks pass on any RBA cuts in full the following month.

Banks responding to refinancing renaissance with competitive rates

At the peak of refinancing, the market was awash with a record number of cashback deals designed to encourage borrowers to switch lenders.

However, with three of the big four banks (CBA, Westpac and NAB) well and truly out of the cashback game, along with close to two dozen other lenders, banks are more focused on rates to win over potential refinancers.

In March, Westpac introduced a new digital loan with advertised rates from 5.84% – available to refinancers only, while last Wednesday, CBA cut its lowest advertised variable rate, also down to 5.84%. AMP, meanwhile, unveiled its own home loan option; a market-first 10-year interest only home loan for investors and owner occupiers.

• 12 lenders have cut at least one variable rate in the last month

• 5.59% is the current lowest variable rate

• 35 lenders currently offer at least one advertised variable rate under 5.75%.

Refinancing a sign of savvy borrowers

Canstar’s data insights director, Sally Tindall says, “Refinancing is back in vogue with almost 100,000 loans switching to a different lender in the first three months of this year.”

“The surge in refinancing activity is a clear sign that borrowers are becoming savvier. They’re no longer passively accepting their existing rates, even when the RBA has delivered them a rate cut.

“Today’s figures from the ABS show refinancing has lifted to the highest point since the September quarter in 2023. This was a pivotal moment in time when the mortgage market was still swimming with cashback offers from lenders fighting for a slice of the refinancing pie.

“In 2025, banks have, by and large, moved away from cash incentives to win new business, with many now focussed primarily on competitive rates to attract customers.

“In March 2023, 35 lenders were offering cashback deals to borrowers. Today, there are just nine providers on the Canstar database offering these upfront cash sweeteners.

“It’s essential for borrowers to recognise the power they hold. Negotiating with lenders, or even switching to a more competitive offer, can translate to substantial savings.

“RBA changes to the cash rate often encourage borrowers to investigate the option of refinancing and if the central bank fires off another cut on Tuesday, we expect these refinancing numbers will continue to rise.”

Below are some of the cashback offers available when you refinance with Canstar. If you’re considering switching home loans, our refinancing comparison table might be a good place to start.

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Source: Canstar. Further details here. Conditions apply.

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