Refinance Your Home Loan in Australia: Are You Paying More Than You Should?

There's a quiet financial penalty hundreds of thousands of Australian homeowners are paying right now. It doesn't appear on your statement. It doesn't have a line item. It's the gap between the rate your lender charges you and the rate they offer new customers, and in the current environment, it has never been more expensive to ignore.

It's called the loyalty tax.

RBA Rate Rises Hitting Australian Borrowers in 2026

The RBA has now raised the cash rate three times in 2026, bringing it to 4.35 per cent, and further rises remain firmly on the table. Westpac is forecasting two more hikes before the end of the year, which would push the rate to 4.85 per cent. Inflation is running above target, fuel prices are elevated, and the cost of living is grinding hard on household budgets.

In this environment, every basis point matters. If your home loan rate is higher than it should be, you're subsidising someone else's new customer deal.

Why Your Bank Charges You More Than a New Customer

We all know banks spend serious money attracting new borrowers. They offer discounted rates, cashback offers and some seriously slick onboarding to make you feel welcome. However, once you're through the door, the generosity tends to stop. They know most people won't switch because refinancing feels complicated, the paperwork feels daunting, and there are always more pressing things to deal with. Lenders count on it and you're the one picking up the tab.

The ACCC's Home Loan Price Inquiry found older loans sit around 0.58 per cent above the average rate on new loans, and switching could save a borrower on a $500,000 mortgage more than $34,000 over the life of the loan. The inquiry was completed in 2020. Rates have moved significantly since then, but the dynamic hasn't. You can read the full report here: ACCC Home Loan Price Inquiry — Final Report.

Signs It's Time to Review Your Home Loan

You don't need to be in financial difficulty to benefit from a review. These are the situations where borrowers most commonly discover they're paying too much:

You haven't reviewed your loan in two or more years. The lending market has shifted dramatically. If your rate was set before or early in the current rate cycle, there's a strong chance a better option exists.

Your property value has increased. A higher equity position means you may qualify for a lower loan-to-value ratio band, which typically attracts a better rate.

Your income or employment situation has improved. Stronger serviceability can open doors to lenders you weren't previously eligible for.

You're on a variable rate with no offset account. In a high-rate environment, an offset account or redraw facility can make a meaningful difference to your effective interest cost.

You're paying principal and interest on a rate deemed competitive three years ago. It probably isn't now.

What Does Refinancing Actually Involve?

Not as much as most people think. The process has become far more streamlined in recent years. Your broker should do the heavy lifting, comparing rates across multiple lenders, handling the paperwork and managing the settlement. For most borrowers, it comes down to an initial conversation and pulling together some standard financial documents.

There are costs to consider, including discharge fees from your current lender and any break costs if you're leaving a fixed rate. But in many cases, the savings in the first year alone outweigh the switching costs, and working out whether they do is one of the first things we go through with a client.

Why Delaying Your Refinance Costs You More Each Month

Unfortunately with ongoing uncertainty in the Middle East, further rate rises have been forecast, so the compounding effect of a higher-than-necessary rate will worse over time, not better. Every month you delay is another month you are overpaying.

Loyalty to a lender that does not return the favour is a habit, not a strategy. A review costs nothing.

As an independent mortgage broker, Nahil Chidiac at Citywide LPI Bankstown has access to a broad panel of lenders, banks, non-banks, and specialist lenders, not just the institutions spending the most on advertising. It's a genuine comparison, not a guided path to a preferred product.

We take the time to understand your full situation:- equity, income, plans for the property, and how long you intend to stay in the loan. Once we know your situation better, we can find the best options to you reflecting your actual circumstances, not a generic best-buy list.

If you haven't reviewed your home loan in the past 12 months, now is the right time. Book a free, no-obligation conversation and find out what you're actually paying. Book a free, no obligation conversation with Nahil Chidiac at Citywide LPI Bankstown. Visit the contact us page to get started now.