Australian Homeowners Struggle to Refinance Mortgages

Stricter serviceability requirements are preventing many borrowers from switching to more favourable loan deals.

Updated on Oct. 20, 2026 in Residential

Australian Homeowners Struggle to Refinance Mortgages

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Is now a good time to stick with your current mortgage lender rather than seeking refinancing?

Australian homeowners are finding it increasingly difficult to refinance their mortgages as lenders enforce strict serviceability buffers. This has led to a significant decline in both switching to new lenders and renegotiating with existing ones.

Why it matters

Borrowers are trapped by higher interest rates, softer property valuations, and redundancies, which widen the gap between their loan obligations and strict serviceability tests. These constraints are effectively locking many out of the competitive refinancing market.

Equifax data shows a 28% year-on-year drop in refinancing with existing lenders and an 8.8% decline in switching to new providers as of September 2026. Lenders now frequently require serviceability buffers that exceed current loan interest rates.

The players

Equifax

This global data and technology company provides credit reporting and analytics used to assess market trends in Australia.

MFAA

The Mortgage & Finance Association of Australia is the peak industry body representing professional mortgage and finance brokers.

NAB

National Australia Bank is a major financial institution that regularly publishes residential property surveys tracking market constraints.

The details

Lenders evaluate applications against buffers that often surpass current interest rates, causing many clients with loans valued between $600,000 and $700,000 to be declined. To counter this, bank retention teams are offering interest rate discounts and fee waivers to keep existing customers from moving their business elsewhere.

February 2024 saw 83% of brokers reporting client refinancing difficulty.
February 2026 marked the period six months prior to the August survey.
August 2026 was when the MFAA Market Sentiment Survey recorded rising serviceability issues.
September 2026 saw a sharp year-on-year decline in total refinancing activity.

Culture Shift

This trend reflects a broader shift away from the historically easy refinancing environment that defined the Australian mortgage market for years. It highlights a hardening of credit standards that forces borrowers to remain with their original lenders regardless of better market offers.

Borrowers may find it harder to secure lower interest rates, directly impacting monthly household budgets and long-term debt servicing. Homeowners should prepare for rigorous serviceability assessments if they attempt to switch lenders or consolidate debt.

The takeaway

Maintaining a strong credit profile and exploring options with your current lender's retention team may be your best strategy when refinancing proves difficult. If you are struggling, consult with a mortgage broker who can navigate current serviceability requirements on your behalf.