Survey reveals lenders keep sharper pricing for borrowers signalling an exit
Australian mortgage holders are increasingly using the prospect of refinancing to secure sharper interest rates from their existing lenders, according to new research from Money.com.au.
The finance comparison website’s nationally representative survey found that 49% of mortgage customers who began exploring a refinance ultimately stayed put after their current lender’s retention team improved the rate on offer. Only 23% proceeded to change banks even after receiving a counteroffer, while 28% reported that their lender did not offer any pricing concession at all.
The survey follows the RBA’s first rate rise in two years in February, which has pushed most home loan pricing well above sub‑5% levels. Against that backdrop, Money.com.au mortgage expert Debbie Hays said borrowers still need to assess whether their current rate is competitive given the higher‑rate environment.
“Lenders often sharpen their pricing when a borrower signals they’re ready to walk,” Hays (pictured right) noted. “Retention teams often have limited pricing authority and a ‘floor rate’ they can offer based on your loan size and loan-to-value ratio. If you stick to your guns, your file can be escalated to a supervisor with discretion to apply a bigger discount.
“In most cases, the best you can hope for is your bank matching the competitor’s rate, they rarely beat it. However, big-bank customers may find their lender’s retention rate still sits above what’s available elsewhere in the market or from a second-tier lender.”
Hays suggested that, in the current setting, rates above 5.25% per annum can still be considered broadly competitive, although borrowers and brokers should continue to benchmark against market pricing and product features.
The research also points to a range of tactics used by lenders when faced with a potential discharge. Some banks, rather than matching or beating a competing variable rate, may direct customers towards a fixed‑rate alternative. While a fixed rate can provide short‑term certainty, it can also involve “strings attached”, including longer fixed terms, limits on additional repayments and significant break costs if the borrower later decides to switch.
Another pattern identified is that some lenders reserve their sharpest pricing for late in the process. Brokers report that improved retention offers may only appear after a formal discharge has been lodged or when the refinance has progressed to solicitors or the PEXA settlement stage. In practice, this can mean borrowers commit time and expense towards a refinance before their current lender reveals its best rate.
In addition, some lenders may steer customers towards internal package changes, cashback deals or movement between package and basic products, rather than simply reducing the rate on the existing facility. Others may promise to “review later”, offering a modest immediate discount while deferring any substantial repricing for several months.
The survey also highlights limited proactive engagement from lenders on pricing. According to Money.com.au, 62% of homeowners said their lender had never contacted them to offer a rate review outside of a refinance context, compared with 38% who reported at least one proactive approach.
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