Refinancing

How to negotiate a lower home loan interest rate with your bank (and when to refinance instead)

How to ask your bank for a lower home loan rate: what to check first, a call script, how to judge the reply and when switching costs outweigh the saving.

Updated: 8 November 2026
Read time: 9 min read
Prepared by: emoney content team

Key checks before you decide

Prepared by emoney content team. Updated 8 November 2026. Sources are listed below.

Find your current interest rate, loan balance, remaining term and whether any part of the loan is fixed.
Look up the rate your own lender advertises to new borrowers for a similar loan, then get one or two genuine competing offers.
Ask your lender for a rate review, any fee waiver it can offer, and written confirmation of the new rate and start date.
Before switching, add up discharge, government, application and break costs, and check LMI if you owe more than 80% of the property value.

In this guide8 sections

Why loyal borrowers can pay more than new customers Gather your loan numbers before you pick up the phone Get one or two genuine competing offers A short call script you can copy Reading the lender's answer What a 0.30 or 0.50 point cut means on a $600,000 loan Costs that can wipe out a cheaper rate When staying with your lender is the better result

Why loyal borrowers can pay more than new customers

A home loan rate is not fixed to the advertised rate for the life of a variable loan. Lenders often price new loans more sharply to win borrowers, while existing loans can drift. People call this the loyalty tax.

The ACCC put numbers on it in the final report of its Home Loan Price Inquiry, published on 5 December 2020. As at September 2020, borrowers with loans three to five years old paid 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 ACCC said many borrowers could save by asking their existing lender for a lower rate or by switching.

The picture has changed since then. Reserve Bank figures for September 2026, the latest month published when we checked on 8 November 2026, show an average rate of 6.23% on outstanding owner-occupier variable loans and 6.22% on new owner-occupier variable loans. Both averages predate the RBA's two 0.25 percentage point cash rate rises on 30 September and 4 November 2026, which took the cash rate target to 4.85%. In December 2022 the same two averages were 5.49% and 4.99%, a gap of about half a percentage point.

So the average gap is now small. Averages hide individual loans, though. Some borrowers sit well above the average and some well below it. The only way to know whether you are paying a loyalty tax is to compare your own rate with what your lender and others offer a borrower like you today.

Data point	What it showed	Source and period
Loans 3 to 5 years old vs new loans	About 0.58 points higher on average	ACCC final report, data as at September 2020
Loans more than 10 years old vs new loans	About 1.04 points higher on average	ACCC final report, data as at September 2020
Owner-occupier variable, outstanding vs new	5.49% vs 4.99%	RBA table F6, December 2022
Owner-occupier variable, outstanding vs new	6.23% vs 6.22%	RBA table F6, September 2026

Gather your loan numbers before you pick up the phone

A rate conversation goes better when you know your own figures. Your latest statement, banking app or online loan account usually shows most of them.

Write down your current interest rate and check whether it is variable, fixed or split. If part of the loan is fixed, note when the fixed period ends, because breaking it early can cost money.

Next, look up the rate your own lender advertises to new borrowers for a loan like yours. Match the details: owner-occupier or investment, principal and interest or interest-only, and a similar loan size. Ask for a Key Fact Sheet if you want a fair side-by-side view. MoneySmart describes the personalised comparison rate on that sheet as a single figure combining the interest rate and most fees.

Finally, estimate how much you owe compared with the property value. MoneySmart notes that having at least 20% equity gives you more to bargain with, and a good credit score also helps.

Current interest rate and rate type (variable, fixed or split).
Fixed-rate end date, if any part of the loan is fixed.
Loan balance and remaining loan term in years.
Annual package or account fees you pay now.
Features you rely on, such as an offset account or redraw.
A rough property value, so you can estimate how much equity you hold.

Get one or two genuine competing offers

Your strongest argument is a real rate another lender would offer you for a comparable loan. A made-up number is easy to test and can leave you with nothing to fall back on.

MoneySmart suggests comparing loans from at least two different lenders, using the Key Fact Sheet for the amount you are likely to borrow. Compare the interest rate, the comparison rate, fees and the features you actually use. A lower rate on a loan without an offset account may not suit someone who keeps savings in offset.

Avoid lodging several formal applications just to collect quotes. Ask whether a step will create a credit enquiry before you agree to it.

Using a mortgage broker is another option. They compare loans from the lenders on their panel, which can give you a genuine offer to take back to your current lender. MoneySmart notes that a broker should show you options from other lenders even if you prefer your current bank, and must act in your best interests when suggesting a loan.

Example

A short call script you can copy

Ring the number on your statement and ask for whoever can review the rate on an existing loan. Some lenders handle these calls through a retention or discharge team. Keep it polite, brief and factual.

Swap the bracketed parts for your own details. Only mention an offer you really have.

Ask for more than the rate. A lender may be able to waive an annual package fee or move you to a cheaper product it offers. MoneySmart notes that some lenders charge a switching fee to move you to a different loan with them, so ask about that too.

Hi, I have a home loan with you ending in [last four digits]. I am reviewing my loan and would like to speak to someone who can review my interest rate.
My current rate is [x]% on a balance of about $[amount]. I can see you advertise [y]% to new borrowers for a similar loan.
I also have an offer from [lender] at [z]%, with a comparison rate of [c]%. I would prefer to stay with you if you can get close to that.
Can you review my rate today? If so, what is the new rate, when does it start, and does it involve a product change or any fee?
Can you also waive or reduce the annual package fee?
Please send me the new rate in writing.
If the answer is no: Thanks. I will compare the full cost of moving. What is the process and timing for a discharge request?

Reading the lender's answer

Judge the reply against your competing offer and the cost of moving, rather than against your old rate. A cut can look generous and still leave you well above what another lender would charge.

Check that any new rate applies to the whole loan, including split portions, and confirm the date it takes effect. On a variable loan the lender can still change the rate later, so treat the result as today's price, not a permanent one.

If the lender offers nothing, you have a clear choice to make and a reason to check the numbers on switching. If it partly closes the gap, the next sections help you decide whether the rest of the gap is worth the cost and effort of moving.

Reply	What to check	Likely next step
Matches or beats your offer	Rate applies to the whole loan, start date, any conditions, written confirmation	Staying may be the simplest result
Partial cut	Remaining gap in percentage points and dollars a year	Compare that gap with the full cost of switching
Move to a different product	Switching fee, features you lose, whether any part becomes fixed	Compare the new product like for like
No change	Whether your competing offer is still current	Work out whether switching is worth it

Next step

Want a broker to check this against your situation?

Share the loan goal, timing and a few key details. An emoney broker can then pick up the enquiry with the relevant context.Compare your rate with a broker

Example

What a 0.30 or 0.50 point cut means on a $600,000 loan

Small rate changes add up on a large balance. The figures below are an illustration, not a forecast of what any lender will offer.

Assumptions: a $600,000 owner-occupier loan, principal and interest, monthly repayments, 25 years remaining, a starting rate of 6.23% (the RBA average outstanding owner-occupier variable rate for September 2026), no fees, and the rate staying the same for the whole period. Most variable rates have risen since September, so treat these as rough sizes.

A 0.30 point cut saves about $1,800 in interest in the first year, roughly $150 a month, although the required repayment falls by only about $110 a month. A 0.50 point cut saves about $3,000 in the first year, roughly $250 a month, with the repayment about $183 lower. If you keep paying your old repayment after the cut, the loan is repaid sooner and the lifetime saving is larger.

Use the same numbers to test switching. If moving would cost $1,500 in total (a made-up figure for this example), a 0.30 point cut would take about 10 months of interest savings, or about 14 months of lower repayments, to cover it. A 0.50 point cut would take about 6 months of interest savings, or about 8 months of lower repayments. Run your own figures in the refinance savings calculator.

Rate	Monthly repayment	Interest in year one	Interest over 25 years
6.23% (starting rate)	$3,951	$37,089	$585,181
5.93% (0.30 point cut)	$3,840	$35,290	$552,053
5.73% (0.50 point cut)	$3,767	$34,091	$530,217

Watch out

Costs that can wipe out a cheaper rate

Refinancing to another lender can save money, but MoneySmart says to make sure the benefits outweigh the costs before you switch. Ask each lender for its fees in writing.

If you owe more than 80% of the property value, the new lender may charge lenders mortgage insurance (LMI). MoneySmart warns this can increase the cost of switching and outweigh the saving from a lower rate. It also suggests asking for a refund of some LMI from your current loan if you do switch.

Fixed-rate loans can carry a break fee if you switch before the fixed period ends. Ask your lender for a written break cost estimate on the day you are deciding, because it can change.

Watch the loan term as well. MoneySmart says to be firm on the length of the new loan, or you could end up paying for longer than the years left on your current one. In the example above, moving to 5.73% over the same 25 years means total interest of about $530,200. Stretching the new loan to 30 years drops the repayment to about $3,494 a month, but total interest rises to about $657,800. That is roughly $72,600 more than staying on 6.23% for the remaining 25 years.

Discharge or termination fee from your current lender.
State or territory fees to release the old mortgage and register the new one. Titles Queensland, for example, charges lodgement fees for both.
Application or establishment fees on the new loan.
Break costs if any part of the loan is fixed.
LMI if you owe more than 80% of the property value.
Stamp duty in some cases. MoneySmart suggests checking with your lender.

Broker note

When staying with your lender is the better result

If your lender matches a competitive rate, or the remaining gap is smaller than the cost and hassle of moving, staying put can be the sensible choice. Negotiating still worked if you leave with a lower rate and a written record of it.

The ACCC recommended in 2020 that lenders be required to prompt borrowers with loans older than three years to review their rate. You do not need to wait for a prompt. A yearly check, or a check whenever rates move or a fixed period is ending, keeps the question in front of you.

emoney is an Australian mortgage broker (Australian Credit Licence 386 494) with phone and digital support Australia-wide. Through a broker, you can compare loans from lenders on their panel with your current loan, including whether staying put looks like the better option. MoneySmart notes that brokers are usually paid commission by the lender and must tell you about it; a broker who charges you a fee must give you a written quote first.

General information only: this guide does not consider your objectives, financial situation or needs, and is not a recommendation about any particular loan.

Calculator next step

Refinance savings calculator

Compare the current loan with a new-rate scenario and see whether switching costs may be recovered.

Best for: Deciding whether a refinance is worth a broker review before starting lender work.
What it calculates: Current repayment, new repayment, estimated switching costs, monthly difference, and rough break-even.

A broker still needs to check discharge costs, valuation, features, cashback rules, income, documents, and lender policy.

Open Refinance savings

Sources used

Home loan borrowers missing out on significant savings by not switching (Home Loan Price Inquiry final report)
ACCCofficial sourceChecked 8 November 2026
Statistical table F6: Housing Lending Rates
Reserve Bank of Australiaofficial sourceChecked 8 November 2026
Switching home loans
ASIC MoneySmartofficial sourceChecked 8 November 2026
Choosing a home loan: Key Fact Sheets and comparison rates
ASIC MoneySmartofficial sourceChecked 8 November 2026
Mortgage switching calculator
ASIC MoneySmartofficial sourceChecked 8 November 2026
Using a mortgage broker
ASIC MoneySmartofficial sourceChecked 8 November 2026
Fixed vs variable home loan interest rates
ASIC MoneySmartofficial sourceChecked 8 November 2026
Lenders mortgage insurance (LMI)
ASIC MoneySmartofficial sourceChecked 8 November 2026
Fee calculator: mortgage and release of mortgage
Titles Queenslandofficial sourceChecked 8 November 2026

General information only

This guide is general information and does not take into account your objectives, financial situation, or needs. A broker can review your circumstances before any recommendation.

Before you switch

Check the numbers before you switch.

Share your current loan, goals and timing. A broker can review the costs, features and lender questions that matter.

Compare your rate with a broker Refinance support