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Home loan rate review: is your rate still competitive?

Christian Tucker
Oct 18
6 min read

Updated: Oct 22

Insights from AGFB · Checked 2 October 2026 · About 6 minutes

In brief

  • The Reserve Bank found that by early 2026, the average gap at the major banks between rates on existing and new variable loans had narrowed to about 0.04 percentage points. An average can still hide a loan that has drifted well above the market.

  • Compare like with like: the same loan-to-value band, loan purpose, repayment type and fees, using a comparison rate rather than the headline rate.

  • Asking your current lender to reprice is often the simplest first step, and it can avoid most switching costs.

  • Refinancing may be worth a look if the gap stays meaningful after costs. Review at least once a year.

Why your rate can drift above the market

Lenders compete hard for new customers, and the discount you were given when you borrowed may not keep pace as the market moves. In its 2020 home loan price inquiry, the ACCC found that borrowers with loans three to five years old were paying, on average, about 0.58 percentage points more than the average rate on new loans. For loans more than 10 years old, the gap was about 1.04 percentage points.

The picture has improved on average. The Reserve Bank reported in May 2026 that, at the major banks, the gap between the average variable rate on existing loans and on new loans had narrowed to about 0.04 percentage points in early 2026. It linked this partly to borrowers refinancing or negotiating a lower rate with their own lender.

So the average looks healthy partly because many borrowers have acted. Moneysmart notes that variable rates on the market can differ by more than 2 percentage points, so the only way to know whether you are paying a "loyalty tax" is to check your own loan.

Start with the rate you are actually paying

Your rate is on your latest statement, in your lender's app and in any rate change notice. When your lender passes on a cash rate change, such as the Reserve Bank's rise to 4.60% announced on 29 September 2026, its notice should show your new rate and when it applies.

Note the balance, the years left, your repayment type, any annual or package fee and, for a fixed loan, when the fixed term ends. Then estimate your loan-to-value ratio (LVR): the balance divided by what the property would likely sell for, which may be lower than when you first borrowed.

How do you compare like with like?

Your loan-to-value band

Many lenders set different rates for different LVR bands, and the rate is usually lower when the LVR is lower. Compare against rates for your current LVR, not the one you started with, though a lender may want a valuation to confirm it.

Purpose and repayment type

Owner-occupier and investment loans are usually priced differently, and interest-only repayments often attract a higher rate than principal and interest. A rate for a different purpose or repayment type isn't a fair benchmark for your loan.

Fees, features and the comparison rate

Some loans charge an annual package fee in return for a lower rate or features such as an offset account. The comparison rate rolls the interest rate and most fees into one figure, which helps you see the overall cost.

For a fair test, ask for a Key Fact Sheet with a comparison rate personalised to your loan. Every lender uses the same layout, which makes side-by-side comparison easier, although it doesn't capture every feature or condition.

How to ask your lender to reprice

Call your lender and ask two things: what rate would you offer a new customer for a loan like mine, and will you apply it to my existing loan? Moneysmart suggests telling your lender you plan to move to a cheaper loan elsewhere, because it may reduce your rate to keep your business.

Have a specific number ready, such as a Key Fact Sheet for a comparable loan. Moneysmart also notes that at least 20% equity and a good credit score give you more to bargain with.

If the lender agrees, get the new rate in writing and check it applies to your current loan rather than a new product with its own fees. Confirm whether the discount is ongoing or only for a set period, and that any offset account stays linked.

When does a review point to refinancing?

If your lender won't move, or its offer still sits well above comparable loans, refinancing may be worth exploring. It may also suit if you need a feature your lender doesn't offer, or a fixed term is ending and the rate it reverts to isn't competitive.

A new lender treats a refinance as a new application, so your income, expenses and debts are checked again. Our refinancing page explains how Christian compares options across lenders, and our Credit Guide explains how AGFB is paid.

When a small saving isn't worth the switch

Switching can mean discharge, application and government registration fees, and break costs on a fixed loan. If you will owe more than 80% of the property's value, lenders mortgage insurance (LMI) may apply again, and Moneysmart warns this can outweigh the saving.

Here is a hypothetical example, not an offer. On a $600,000 principal-and-interest loan with 25 years left, a rate of 6.20% instead of 6.50% lowers the repayment by about $112 a month and saves about $1,800 in interest in the first year. If switching cost $2,500, it would take about 22 months of lower repayments to win that back.

With a gap of 0.10 percentage points, the saving falls to about $37 a month, and the same costs take more than five years to recover. That is why asking your current lender first, which usually costs little or nothing, makes sense even for a small gap. Moneysmart's mortgage switching calculator can run your own figures.

How often should you review your rate?

Once a year is a sensible habit, plus an extra check when something changes: a rate change notice, a fixed term with a few months to run, a lower LVR, or a change in your income or plans. The ACCC's 2020 inquiry recommended that lenders regularly prompt borrowers with loans more than three years old to review their rate, but you don't need to wait for a prompt.

Your rate review checklist

  • Your current rate, balance, years left and repayment

  • An estimate of the property's value, so you know your LVR band

  • Your loan type: owner-occupier or investment, repayment type, fixed or variable

  • Any package fee, and the features you actually use

  • Key Fact Sheets for two or three comparable loans

  • Your lender's answer to a repricing request, in writing

  • Discharge, break and new-loan costs, if you are weighing up a switch

  • A calendar reminder for the next review

Common questions

Will asking for a lower rate affect my credit score?

Asking your current lender to reprice doesn't usually involve a new credit application. Applying to refinance with another lender usually does, so it can help to compare first and apply once you have decided.

How big does the gap need to be before I act?

There is no set figure. Asking your lender costs little, so any meaningful gap is worth raising, while switching only pays if the saving outweighs the costs over the time you expect to keep the loan.

Try the numbers

Use our Repayments calculator to compare your repayment at your current rate and a lower one over the same term. Not sure which step comes first? Find Your Next Step asks a few short questions and points you to the right tool or enquiry.

Talk it through

If you'd like a second view on whether your rate is still competitive, Christian can compare it across lenders with you.

Sources

General information only. This article does not take into account your objectives, financial situation or needs. Your full financial situation and requirements must be considered before any offer or acceptance of a loan product. All lending is subject to the lender's assessment and criteria, and fees and charges apply. Figures and rules are correct as at the checked date shown and can change.

Avantgarde Financial Brokerage Pty Ltd, Corporate Credit Representative 580346, authorised under Australian Credit Licence 389328 held by Connective Credit Services Pty Ltd.

IS YOUR RATE STILL SHARP?

Send Christian your current rate and lender and he will check it against lenders on the AGFB panel. Prefer to run the numbers first? Try the refinance calculator. No credit check to enquire. Christian replies the same business day.

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