Is now a good time to switch banks for a better home loan rate? Here’s what to know after the latest RBA hike

Mortgage holders may save hundreds of dollars a month by switching banks now that the lowest interest rates are close to 6%, after the Reserve Bank of Australia lifted its key rate to the highest level in 15 years.

But professionals warn it’s getting harder to find big discounts.

Here’s what you need to know about getting a better rate.

Lowest rates are near 6%

The average variable mortgage rate for owner-occupiers will be 6.49% once Tuesday’s rate increase is passed on, Reserve Bank data shows.

But some banks are offering rates close to 6%. Switching from the average rate to that lower rate would represent a $180 cut to monthly repayments, for someone with a $600,000 loan with 25 years left in their term.

Among the big four banks, Westpac is offering the lowest variable rate at 6.24%, according to comparison platform Canstar. Dozens of smaller lenders are offering lower rates than the big four.

Canstar data indicates just two lenders will offer variable rates under 6% once Tuesday’s rate increase is passed on.

If the RBA hikes interest rates again, the lowest variable rate will likely lift to 6.25%.

A handful of lenders, typically smaller banks and credit unions, are offering fixed rates below 6%, mostly hovering at 5.99%. The fixed rates on offer have risen in recent months as markets grow more certain the RBA’s next move will be another hike, not a cut.

Record refinancing

Borrowers can sometimes get a better rate just by calling up their own bank and seeking a rate review, though it’s often more difficult to get a real discount.

Sally Tindall, Canstar’s director of data insights, says borrowers have a better chance of convincing their bank if they talk tough about leaving for another lender.

Tindall says borrowers should call once they know their own rate, their lender’s best rate and better rates across the sector – or better yet, have an offer from another bank.

“If you really want to put your best haggling foot forward, get yourself prepared, with … a competitor offer, and be prepared to ask for a mortgage discharge form,” Tindall says.

Switching lenders can take over a month and typically costs more than $1,000 but the one-time fees may be offset by the longer-term benefits of a lower rate.

Plenty of Australians are switching their home loans, with a record $65bn worth of external refinancing in the first half of 2026, according to Australian Bureau of Statistics data. Credit agencies say refinancing applications have held up since June.

But falling house prices mean a growing number of Australians will be locked out from refinancing because they don’t have adequate borrowing capacity.

The share of Australians with loan to value ratios (LVRs) of more than 80% has risen this year, with recent buyers especially likely to have seen their values slip, according to the Reserve Bank.

The chief executive of broking group Aussie, Sebastian Watkins, says borrowers with LVRs above 80% are in “mortgage prison” and are less likely to be offered a lower rate.

“As values fall, loan-to-value rates rise [and] once you push above 80%, the door to a competitive refinance can start to slam shut,” Watkins says.

Rebecca Jarrett-Dalton, a Sydney mortgage broker, says banks have become less willing to offer better rates.

Waiting before switching

More than 40 lenders have announced new rates since the RBA decision, Canstar says.

But many lenders will wait to publicly announce and others will avoid publicising their decision entirely.

Jarrett-Dalton says that makes it difficult to judge the best ongoing rate in the days after a cash rate increase.

Borrowers who wait a few weeks will have a better chance of seeing whether a rate that seemed too good to be true will lift after the hike or still run at a discount.

On the upside, with September over, workers will have three months’ worth of pay records for the financial year that started in July.

Jarrett-Dalton says lenders will now be able to account for regular additional income they might otherwise have ignored in applications, such as overtime, weekend loading or allowances.