New analysis from financial comparison site Money.com.au, based on Australian Bureau of Statistics (ABS) data, reveals that internal refinancing reached its highest level on record in the year to March 2025.
During that 12-month period, 35 per cent of all refinanced home loans were internal refinances — the highest share since the ABS began tracking this data in September 2020 and well above the four-year average of 30 per cent.
In absolute terms, 194,898 borrowers renegotiated their home loans with their current lender, out of 554,820 total refinances over the year.
The remaining 65 per cent of borrowers refinanced externally by moving their mortgage to a new lender.
Jacob Overs, General Manager of Lending at Money.com.au, said the trend reflects a shift in strategy by lenders, who are now far more aggressive in trying to retain existing customers as market competition intensifies.
“Sending a discharge form to your bank is like pulling the pin; it tells your bank you’re serious about leaving, and they’ll often come back with surprisingly aggressive retention offers, sometimes even better than what they’re offering new customers,” Mr Overs said.
“If you play hardball and formally start the loan discharge process, your lender is far more motivated to offer their best rate than if you simply ask for a reprice.”
He added that for some borrowers, staying with their existing lender can make financial sense, particularly when weighing up potential savings against the cost and effort of switching.
“It can make sense to stay with their current lender if they’re offered a competitive rate, especially if you could avoid refinancing fees, which can run into the hundreds, and the hassle of switching accounts and direct debits,” Mr Overs said.
The data comes as interest rates are expected to ease later in 2025, prompting increased borrower activity and heightened competition among lenders to retain their loan books.
According to Mr Overs, several factors can improve a borrower’s chances of negotiating a better rate with their current lender, even without switching.
One key driver is a lower loan-to-value ratio (LVR) — the ratio of the loan amount to the property’s value.
As borrowers pay down their loans and property values rise, their LVR improves, making them lower-risk clients in the eyes of lenders.
“If you’ve built up a good repayment history, your loan amount as a percentage of your property’s value (known as your loan-to-value ratio or LVR) will likely be lower than when you first took out your mortgage. As a result, you’ll be considered a lower-risk borrower — which means you’d qualify for a lower interest rate from your lender,” he said.
However, he added that for loans under $150,000, lenders are typically less motivated to compete on pricing.
Another tactic is formally starting the refinancing process by submitting a discharge form, a move that signals to the bank that a borrower is seriously considering leaving.
This often prompts lenders to reveal retention pricing not normally advertised.
“Lenders are more willing to cut deals to keep existing customers from leaving. Your lender may also have internal rate tiers or retention offers that aren’t publicly advertised.
Borrowers who hold multiple loans with the same lender — such as a home loan and an investment property loan — are also in a stronger position to negotiate.
