Refinancing Is Busy. Not Everyone Can Switch.

The Reserve Bank lifted the cash rate to 4.60 per cent at the end of September, its fourth increase this year. Three weeks on, the repricing has largely flowed through, and the conversation in mortgage markets has moved from "will rates rise" to "can I move my loan".

The short answer is that a lot of people want to. A smaller group can.

Where rates have landed

Canstar's weekly wrap on 13 October counted 40 lenders, including all four major banks, that had passed on the September rise. They lifted 375 owner-occupier and investor variable rates by an average of 0.25 percentage points. Canstar's average variable rate for owner-occupiers paying principal and interest sat at 6.75 per cent, with only one rate on its database below 5.75 per cent.

Fixed rates moved too. Twenty-one lenders raised 510 fixed rates by an average of 0.21 percentage points in a week, and the last fixed rates starting with a 5 moved above 6 per cent. Sally Tindall at Canstar called that "a troubling sign", because banks tend to move fixed rates ahead of an expected hike rather than after one. More than 90 per cent of lenders now offer their cheapest rate on a variable product.

Refinancing is one of the steadiest flows

The official data runs a quarter behind, but it already showed refinancing holding up while other lending softened. In the ABS Lending Indicators for the June quarter, owner-occupier external refinancing, meaning a switch to a different lender, was $41.9 billion. That was down 2.8 per cent on the quarter and up 2.8 per cent on the year. Investor external refinancing was $25.2 billion, up 12.0 per cent on the year. For comparison, new dwelling commitments, which exclude refinancing, were $97.6 billion and fell 5.2 per cent over the quarter.

More recent survey work points the same way. Finder research published on 19 October found 14 per cent of mortgage holders, around 462,000 people, plan to refinance with a different lender in the next 12 months. Another 9 per cent said they had switched in the past year. Finder put refinancing at between 60 and 65 per cent of mortgage sales, against about 35 per cent historically. Its own sentiment tracker found more than one in three mortgage holders said they struggled to pay their home loan in September.

The constraint is the assessment, not the appetite

This is the part that headline refinancing numbers miss.

APRA requires lenders to assess a new borrower's ability to repay at an interest rate at least 3 percentage points above the loan rate. With the average variable rate now around 6.75 per cent, that assessment rate sits well above where it was when many current loans were written. A borrower who has never missed a payment can still fall short of a new lender's test.

Tindall made the same point in plain terms: borrowers with straightforward loans may be able to secure a better deal, but those with more complex arrangements, or whose financial position rules out a switch, could remain stuck for now.

The RBA's October Financial Stability Review adds some useful history. Lenders can apply limited exemptions to serviceability requirements, for example in like-for-like refinancing. In late 2023, during the last refinancing wave, the share of loans granted exemptions rose sharply to about 5 per cent of new lending. Liaison suggested many of those were borrowers who no longer passed the stricter assessment after successive rate rises.

Stress is real, but concentrated

None of this means the mortgage book is in trouble. The same Review estimated that around 2 per cent of variable-rate owner-occupier borrowers had a cash flow shortfall, where income does not cover scheduled repayments and essential expenses. Most of that group had savings to cover the gap for at least six months. Arrears have picked up a little but remain around pre-pandemic levels, and the median borrower could cover more than a year of scheduled payments from offset and redraw balances.

So the picture is uneven rather than alarming. Most households are absorbing higher repayments. A minority are under real pressure, and some of those are the borrowers least able to move their loan.

What I take from it

A few observations, offered as personal views.

First, high refinancing volumes are a sign of borrowers responding to price, not necessarily a sign of distress. Strong competition for good customers is part of why the flow has held up.

Second, the borrowers who would benefit most from a lower rate are not always the ones who can get it. Serviceability buffers exist for good reasons, and they also mean refinancing relief is not evenly shared.

Third, for anyone working in property and credit, the practical read is about who sits where. Clean, well-documented files will keep moving between lenders. More complex positions, including business owners with lumpy income and borrowers carrying higher leverage, will take more time, more preparation and a clearer story.

The next data points are the ABS inflation release on 28 October and the RBA's decision on 3 November. Neither will change the arithmetic of the serviceability test.

None of this is a recommendation to refinance, borrow or lend. Everyone's position is different.

Sources

ABS, Lending indicators, June Quarter 2026 (released 14 Aug 2026)

Mortgage Professional Australia, Major mortgage repricing underway following four RBA rate rises (13 Oct 2026, Canstar data)

realestate.com.au, Almost 500,000 mortgage holders plan to refinance as interest rates reach 15-year high (19 Oct 2026, Finder research)

RBA, Financial Stability Review October 2026, 2. Resilience of Australian Households and Businesses

RBA, cash rate target 4.60 per cent effective 30 Sep 2026, next decision 3 Nov 2026

APRA, APRA maintains current macroprudential policy settings in highly uncertain environment

Personal views, not financial advice.