Is It Time to Refinance? Why Melbourne Borrowers Could Save $287/Month Right Now

Refinancing activity across Victoria has surged 28% year-on-year in 2026 — and it's not hard to see why. With three RBA rate hikes already this year pushing the cash rate to 4.35%, borrowers who haven't reviewed their home loan recently could be paying significantly more than they need to. Here's everything you need to know.

Why Refinancing Is Surging Across Melbourne and Victoria in 2026

Three factors are driving the biggest refinancing wave Victoria has seen in years:

• Three RBA rate hikes in 2026 — the cash rate has risen from 3.85% to 4.35% since February, adding hundreds of dollars per month to variable rate mortgages
• The fixed-rate rollover tail — borrowers who locked in ultra-low rates of 1.9–2.5% during 2021–22 on 4 and 5-year terms are still rolling onto current variable rates, facing repayment shocks of over $1,060/month on a $600,000 loan
• The lender loyalty tax — lenders consistently offer better deals to new customers than existing ones. Borrowers sitting on a standard variable rate are often paying 0.5–1.0% more than necessary

According to the latest ABS lending data, refinancing submissions through broker networks increased 18.7% year-on-year nationally in the March 2026 quarter — with Victoria and Tasmania leading the country at 28% growth.

How Much Could You Actually Save by Refinancing?

The savings depend on your loan balance, the rate difference, and your remaining term. Even a modest rate reduction adds up substantially over time:

Beyond rate savings, refinancing can also unlock: a better offset account, debt consolidation, equity release for renovations or investment, or a switch to a lender that better suits your current life stage. Our refinancing service covers all of these scenarios.

Are You About to Roll Off a Fixed Rate?

If you fixed your rate in 2021 or 2022 at 1.9–2.5% and chose a 4 or 5-year term, you may be rolling onto a standard variable rate very soon. The numbers are confronting:

On a $600,000 mortgage, transitioning from a 2.5% fixed rate to a current standard variable rate of around 6.5% means repayments jump by approximately $1,060 per month — or over $12,700 per year.

The key is to start the process 60–90 days before your fixed term expires. The revert rate your lender automatically moves you to is rarely the best available — borrowers who use the fixed expiry as a trigger to shop the market consistently find better outcomes. Refinancing typically takes 4–6 weeks, so don't leave it to the last moment.

The Real Costs of Refinancing (And Your Break-Even Point)

Refinancing costs are typically far lower than most borrowers expect, and are almost always recovered within a few months of savings:

Break-even calculation: divide your total switching cost by your monthly saving. If refinancing costs $1,500 and you save $250/month, you break even in 6 months. Every month after that is pure saving. If you're staying in your home for more than a year, the case for refinancing is almost always compelling.

How APRA's Rules Affect Your Options in 2026

Two regulatory settings are shaping refinancing in 2026 — worth understanding before you apply:

The 3% Serviceability Buffer

APRA requires lenders to assess all new mortgage applications — including refinances — at a minimum of 3 percentage points above the actual loan rate. With current variable rates around 6.0–6.5%, lenders are stress-testing at 9.0–9.5%. For most like-for-like refinances this is straightforward. It becomes more of a factor if your income has decreased or you're also looking to increase your loan amount.

New Debt-to-Income (DTI) Limits — February 2026

From February 2026, APRA limits lenders to no more than 20% of new mortgage lending going to borrowers with a debt-to-income (DTI) ratio of 6 or above. If your total debt exceeds 6 times your gross annual income, some major banks may be more restrictive. An IFG broker can identify which lenders have capacity and the most competitive rates for your DTI profile — without leaving a trail of credit enquiries on your file.

What a Mortgage Broker Does That a Comparison Site Can't

• Not all lenders are on comparison sites — many of the most competitive rates come from smaller lenders and mutuals that don't pay for placement
• Advertised rates aren't always available to you — your LVR, employment type, property type, and credit history all affect your actual rate
• One application, multiple lenders — a broker assesses your profile once and identifies the right lenders, preventing multiple credit enquiries that can reduce your credit score
• Ongoing monitoring — IFG continues to watch the market after your loan settles and alerts you when a better deal appears. We work for you, not the lender

IFG has access to over 40 lenders and is paid by the lender you choose — there is no direct cost to you for our service.

Step-by-Step: How to Refinance Your Home Loan in Melbourne

1. Free loan health check with IFG We review your current rate, loan structure, remaining term, and goals. We run break-even calculations and give you a clear picture of what's possible before you commit to anything.
2. Compare across 40+ lenders We search our full lender panel to find the most competitive rate and features for your situation — factoring in your LVR, income, DTI, and employment type.
3. Prepare and lodge your application You'll need payslips or tax returns, 3 months of bank statements, your existing loan statement, and proof of ID. We prepare the application on your behalf.
4. Property valuation Your new lender arranges a valuation — either a full inspection or a free desktop valuation — to confirm your LVR and finalise approval.
5. Formal approval and loan documents The lender issues formal approval and sends the new loan contract. We walk you through the key terms before you sign anything.
6. Settlement — your new loan takes over Your new lender pays out your existing lender. Your old loan closes and your new, lower-rate loan begins. Total timeline: typically 4–6 weeks from application to settlement.