The cash rate has sat at 4.35% since 17 June 2026, after increases in February, March and May. Repayments moved with it, and refinancing in Gippsland is back on a lot of kitchen tables across Traralgon, Morwell and Moe.
Most people start from the same assumption, which is that their lender has quietly been charging them more than it charges new customers. On the current numbers, that is very nearly untrue. The real reason to switch sits somewhere else, and we go through it with any home loan client who raises it.
The loyalty penalty is worth about four basis points
The Reserve Bank publishes the gap between what existing borrowers pay and what new customers pay. Its May 2026 Bulletin on banks’ funding costs and lending rates put that gap at four basis points, using data to March 2026.
Four basis points on a $450,000 loan works out to around $180 a year. Nobody should leave that behind. It will not change how your month feels, and on its own it does not justify the paperwork.
Where the real difference between loans shows up
Four basis points is an average across the whole market, and averages have a way of hiding the range underneath them.
MoneySmart puts the difference between the cheapest and dearest variable rates on offer at more than two per cent. Two per cent on a $450,000 loan is roughly $9,000 a year in interest. Whether any of that is available to you depends on where your current rate sits inside that spread, which is a question about your loan rather than about lenders in general. Plenty of Gippsland borrowers who refinanced recently already sit close to the sharp end of it. Others have not looked at their rate since settlement.
Is your offset account linked properly?
Worth checking, and more urgently than it sounds. An ASIC review found some banks had failed to properly manage offset accounts. Customers paid more interest than they should have, with no visible sign that anything had gone wrong. The repayment amount never changes, so nothing looks broken.
MoneySmart’s guidance on mortgage offset accounts sets out an example. One borrower held a $750,000 loan with $50,000 sitting in an offset that the bank never linked. At a rate of 6.25%, that cost over $3,000 in extra interest across a single year. Across the full loan term, the figure reaches nearly $230,000 and four additional years of repayments.
Here is the detail that matters if you are switching. Refinancing or changing loan products can break the link between your offset and your mortgage, and re-establishing it may take a call to your bank. Offset accounts now sit on 55% of housing loan facilities, up from around 40% five years ago. That leaves far more households carrying this risk than a few years back.
What a switch costs before it saves anything
Refinancing carries costs that tend to surface late, usually once someone has already decided to go ahead:
- Discharge fee to close your existing loan
- Application fee on the new one
- Break fee if you are on a fixed rate
- Switching fee if you refinance internally with your current lender
- Stamp duty, which can apply depending on your circumstances
- Lender’s mortgage insurance again if you hold under 20% equity
The LMI one bites hardest. You may pay it twice if you paid it on your original loan and still hold under 20% equity. Ask your current lender about a partial refund before you commit to anything.
Loan term is worth a look as well. Moving a loan with 22 years left onto a fresh 30-year term drops the repayment and lifts total interest. Some borrowers are happy with that trade, and others would refuse it flat if anyone had spelled it out for them. Negotiate a term close to what you have remaining.
Ask your lender for a reprice first
Tell your existing lender you are looking at cheaper loans elsewhere, and see what comes back. With at least 20% equity and a clean credit history you have real leverage, and retention teams would generally rather drop your rate than lose the loan.
A reprice avoids the discharge fee, the application, the valuation and the offset re-linking. It is the quieter option and often the better one.
Rising rates have tightened who qualifies
Rates have climbed 0.75 percentage points across 2026. Lenders assess your capacity to repay at a rate above the one you would pay, so an income that comfortably supported your loan two years ago may not support a fresh application now.
This turns up most often with self-employed borrowers. Their income comes from tax returns that can be over a year old when the application lands. Refinancing may still be possible, but the sequence matters. Finding out where you stand beforehand beats having a decline sitting on your credit file afterwards. That read comes from three decades in commercial banking and broking, on both sides of the credit desk.
Where to start with refinancing in Gippsland
For some Gippsland households, switching will not be worth the trouble. For others it is worth several thousand a year. Nothing on this page can tell you which one you are, because that depends on your rate, your equity position and what your current lender will do to keep you.
Bring your last home loan statement in and we will work through it with you. Talk it through with Justin before you commit to anything. Book a time.
FAQs
Is refinancing worth it in 2026?
That depends where your rate sits now. The RBA measured that average gap at four basis points as at March 2026. The difference between the cheapest and dearest loans on the market runs to more than two per cent. The average says very little about your own loan.
Will refinancing break my offset account?
It can. MoneySmart warns that refinancing or switching loan products can break the link between an offset account and its mortgage. Re-establishing it may require a call to your bank. Check it in your banking app after settlement rather than assuming it carried across.
What fees do you pay when refinancing a home loan?
Discharge fees, application fees, and break fees on fixed loans. Switching fees apply if you refinance internally. Stamp duty can apply in some circumstances, and lender’s mortgage insurance returns if you hold under 20 per cent equity.
Should I ask my current lender for a better rate first?
Usually, yes. Telling your lender you are considering a cheaper loan elsewhere often prompts a reprice. That works best with at least 20 per cent equity and a clean credit history. A lower rate on your existing loan sidesteps switching costs entirely.
Can I be refused a refinance if my income has not changed?
Yes. Lenders assess repayment capacity at a rate above the one you would pay. After three cash rate rises in 2026, some borrowers no longer qualify for a loan they could have serviced two years ago. This hits self-employed applicants working from older tax returns hardest.
