Thinking about refinancing your mortgage? Check these 3 things before calling the bank

For home owners, making sure you’re on a competitive interest rate hasn’t been this important to your household budget in years.

On Tuesday, the Reserve Bank of Australia lifted the official cash rate for the fifth time in 2026, pushing it to 4.85% – higher than it’s been since 2008.

That rate hike came just a day after property research group Cotality reported national house prices had fallen for a seventh consecutive month, with home values declining at the fastest rate of the past 40 years.

If you’re looking for a better home loan deal, here are three things worth considering first. And if you’re starting to wonder how you’ll afford higher repayments, it’s important to know when to call your bank for help.

Read more: RBA hikes interest rates to an 18-year high, warning inflation will hurt for another year

1. Compare your rate – and don’t forget fees

Before Tuesday’s rate hike, you could get variable rates as low as 6.09% with a non-bank lender or 6.35–6.7% with a mainstream bank. So assuming most banks pass on this week’s 0.25 basis point rate rise in full, the rate for a basic variable loan from a major bank should soon be about 6.6–7.0%.

If your loan rate is higher than that, it’s worth asking for a better deal from your own bank or exploring refinancing with a new lender.

Banks often advertise lower rates to attract new customers, so check what your current lender is currently advertising.

However, you do need to make sure you’re comparing the right loan type and if it has the features you want. For instance, if having an offset or redraw account is important, you need to specifically search for and compare those options.

You also need to check for loan discharge fees, early repayment penalties and other fees from your existing lender. Those will be in your current loan documents, or else ask your bank.

Check if there are monthly or annual fees you need to factor in paying with a new loan or lender.

Once you have those details, you can use the federal government’s free Moneysmart mortgage calculator to get a better sense of whether you would actually save money by switching lenders.

2. Has your property value changed?

When a bank is assessing your home loan, they look at the “loan-to-value” (LVR) ratio: how much you’re asking to borrow as a percentage of the value of the property. The lower the LVR, the lower the risk to the bank.

If you need to borrow more than 80% of the value of your property, you’ll be seen as a riskier customer and may have to pay mortgage insurance. This can cost thousands.

Australia has seen such strong house price increases in recent years that most people who bought a home even a few years ago are still likely to be ahead on property values compared to when they originally bought.

Even if the current property price downturn reached 15% – even more than Westpac’s latest forecast of a 10.9% fall for the year to March 2027 – it would only see prices fall back to their level in early 2024.

But those who bought their home in the last 12–18 months should take particular care – especially if they bought a home with a deposit of 20% or less. Lower property values could make it harder to refinance with a new lender, or reprice their existing loan with their own bank.

You can enter your address into realestate.com.au or Domain to get a sense of a current price range for your home. While these estimates are only rough, they do use similar measures to what banks would consider, such as recent sales in the area.

3. Could you pay 3% more in rates?

Under official Australian lending rules, all banks must assess a borrower’s capacity to repay their home loan, including with what’s known as a “3% minimum serviceability buffer”.

With typical variable home loan rates set to move at about 6.6–7% per year after this latest rate rise, lenders will have to check your ability to pay rates of even 9.6–10%.

Now, call your bank or mortgage broker

Once you have an idea of the best rates around, roughly what your property is currently worth, and whether you’d pass the 3% “serviceability buffer” test, you’re in a much better position to call your bank and talk to their home lending staff.

With home loan applications dropping, banks don’t want to lose many customers. So as a first step, have a list of specific, comparable rates. Ask if they can match those.

Alternatively, if you use a mortgage broker, doing some basic homework can give you more confidence you’re being offered the best deals available.

Need help? Don’t wait

Most Australians borrow with one of the big four banks – and most (85–88%) are actually still ahead on home loan repayments.

But according to recent Canstar analysis, the remaining 12–15% of big four bank customers don’t have that savings buffer.

If that’s you, or you’re worried about the latest rate rise, call your bank’s home lending team. Explain your situation.

They may be able to modify your loan: from making it interest-only for a period, or extending the term of the loan.

Doing that comes with downsides too: the longer you’re repaying your loan, the more interest you’ll pay.

But discuss your options with your bank or broker. Don’t wait until you’re missing payments to seek help.

You can also seek free advice from the National Debt Helpline (1800 007 007).

Disclaimer: this is general information only and not to be taken as financial advice.