Refinancing tipped to climb further as RBA makes another rate reduction this month
Competition among home loan providers is intensifying as lenders seek to attract borrowers following the Reserve Bank of Australia’s recent interest rate reductions.
Data from Mortgage Choice shows a 22% increase in refinancing activity during the June quarter, following the RBA’s rate cuts in February and May. The company’s latest Home Loan Report indicates that the value of loans for refinancing rose more than 22% compared to the previous year.
Borrowers in South Australia and the Northern Territory recorded the highest annual growth, with a 28% year-on-year increase in the value of refinance loans.
The report, which draws on Mortgage Choice’s submission data and a survey of 1,000 consumers, highlights key trends in home loan activity and borrower intentions across Australia.
“The Reserve Bank’s second cut to the cash rate during the June quarter spurred borrowers to meet with their mortgage broker to review their home loans,” said Anthony Waldron (pictured), chief executive of Mortgage Choice. “Findings in the data show 72% of homeowners review their home loan at least once a year, up from 59% a year ago.”
The survey found that nearly half of respondents (49%) reviewed their home loan to secure a lower rate. Other motivations included consolidating debt (11%), changing the loan term (10%), and switching between fixed and variable rates (10%). Another 10% cited a desire to access features such as offset accounts or redraw facilities.
As Mortgage Choice’s data does not yet reflect the most recent cash rate cut, which was announced last week, industry observers expect refinancing activity to climb even further as more borrowers look to take advantage of lower rates.
Major lenders, including the four largest banks, have already begun passing on the latest rate cut to customers. Some borrowers will see the impact immediately, while others may experience changes from September.
The Reserve Bank’s next cash rate decision is scheduled for September 29.
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