Nearly two-thirds of refinancers are moving to new lenders as competition for home loan customers intensifies
A sharp rise in mortgage refinancing is reshaping Australia’s home loan market, with close to 700,000 borrowers renegotiating or moving their loans in the past year and nearly two-thirds shifting to a new lender, underscoring intensifying competition for business and heightened pressure on banks’ retention strategies.
Speaking on a podcast episode at Savings.com.au, Simon Birmingham (pictured top), chief executive of the Australian Banking Association, noted that shifting borrower behaviour, particularly among younger customers, was driving the trend.
“We do see, particularly with younger generations of consumers, not so much of that traditional absolute loyalty to the stick-with-one-bank-for-life approach, so they're willing to shop around,” he said.
Birmingham added that lenders were adjusting their strategies in response to more mobile borrowers. “On the bank side, we're seeing many different approaches to connecting with customers offering different products,” he shared.
“That has seen some close to 700,000 people refinance their mortgages, up 20% from the previous year, and most of those, nearly two thirds of them refinancing to a new lender, which really shows that Australians are shopping around and trying to find the deal that best suits them in their circumstances.”
Australian Bureau of Statistics figures show that 640,137 home loans were renegotiated or switched in 2025, about 20% higher than in 2024. A majority of those borrowers moved to a different lender rather than renegotiating with their existing bank, underlining a shift away from long-term single-bank relationships.
This activity continued despite three interest rate cuts last year, which would have automatically reduced repayments for many existing customers. Instead, a large cohort chose to refinance to secure sharper pricing or more suitable terms, reinforcing the need for brokers and lenders to maintain proactive retention and repricing strategies.
The refinancing boom is adding pressure to the major lenders, with the big four banks still holding about 80% of Australia’s mortgage book. Rising borrower mobility and the ongoing strength of broker-originated lending are forcing banks to review product design, pricing and service propositions.
“The growth in mortgage broker lending means that more choices are more easily available to people, but banks have responded and are trying to win back some of that broker market,” Birmingham said. “Sometimes it will pay to speak direct to some banks to be able to get the best possible deal.”
In response, many lenders are using direct-channel offers, limited-time interest rate discounts and retention pricing to hold on to existing borrowers and to compete with broker-led refinancing flows.
“Australians are shopping around and trying to find the deal that best suits them and their circumstances,” Birmingham said. “As consumers move, so too will the industry in that fierce competition to be able to bank your dollars.”
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