Should You Refinance in 2026? The $1,500-a-Year Question¶

As of April 2026, variable home loan rates across the major lenders sit between 5.49% and 6.35%. Apex Bank's current standard variable rate is 5.89%, with discounts available for qualifying borrowers.

But here's the thing: the average Australian mortgage holder is paying 6.22%. That means millions of households are sitting 30–70 basis points above the best available rates — quietly handing over thousands of dollars a year they don't need to.

The Quick Maths¶

On a $500,000 mortgage:
- At 6.22% (market average), the monthly repayment is approximately $3,064
- At 5.89% (Apex standard variable), it's approximately $2,960
- At 5.49% (best available with lender-match), it's approximately $2,836

That's a saving of $104 to $228 per month — or $1,250 to $2,740 per year — just by moving to a more competitive rate on the same loan.

Over a 25-year remaining loan term, that's $31,000 to $68,000 in interest savings.

The Hidden Costs of Refinancing¶

Refinancing isn't free. Typical costs:

Apex Bank offers a refinance rebate of up to $3,000 to offset these costs for qualifying applicants.

The LMI Trap¶

If your current loan has LVR above 80% and you didn't pay LMI with your current lender (or paid it a long time ago), refinancing to a new lender means paying it again. For many borrowers this single cost wipes out 5–10 years of interest savings.

Rule of thumb: if you're above 80% LVR, check whether your current lender will price-match before refinancing externally. Sometimes a call is all it takes.

Break-Even Analysis¶

A simple way to decide:

1. Monthly saving = Current repayment – New repayment
2. Total switching cost = Discharge + settlement + new application fees (often $800–$1,500)
3. Break-even months = Switching cost ÷ Monthly saving

If you break even in under 12 months, refinancing is usually worth it. 12–24 months is a judgment call. Over 24 months means the savings aren't big enough to justify the hassle.

Variable vs Fixed¶

In 2026, fixed rates are priced slightly below variable for most terms, reflecting expectations that the RBA will hold or marginally ease:

• 1 year fixed: 5.59%
• 2 year fixed: 5.69%
• 3 year fixed: 5.79%
• Variable: 5.89%

Fixing protects against upside rate moves but locks out features like unlimited extra repayments and offset (on most Australian fixed loans). Split loans — part fixed, part variable — are a popular compromise.

Don't Forget Offset¶

An offset account linked to a variable loan is worth up to the variable rate on every dollar in the offset. At 5.89%, $20,000 in offset saves you $1,178/year in interest — and the saving is tax-free, unlike the same money earning interest in a savings account.

If you're comparing offers, always check:
1. Is offset offered on the variable rate?
2. Is there an offset account fee?
3. Is the offset 100% offset, or partial?

Some lenders market "offset-like" redraw facilities which are less flexible — know the difference.

The Loyalty Penalty¶

Australian banks quietly increase rates on older loans. A 2025 ACCC study found that borrowers who'd been with their lender for 4+ years were typically paying 0.45% more than new customers on equivalent products. This is the "loyalty penalty" — and refinancing (or threatening to) is the only reliable way to escape it.

A Decision Checklist¶

Before you refinance, confirm:

• ☐ Your current LVR (if above 80%, get a valuation first)
• ☐ Your current rate vs the new lender's rate
• ☐ Whether you'd lose offset, redraw, or other features
• ☐ Whether break-even is under 12 months
• ☐ Your credit score (refinance applications trigger a hard enquiry)
• ☐ Whether your current lender will price-match (always ask first)
• ☐ Any fixed-rate break costs if you're currently fixed

How Apex Can Help¶

Apex Bank's home loan team will:
- Run a rate review against your current lender's best available rate
- Model your potential savings over 5, 10, and remaining loan term
- Cover discharge and settlement costs (up to $3,000) for qualifying refinances
- Complete most refinances within 14–21 days of application

To check your current rate against Apex Bank's rate board and model potential savings, log in to the Apex Bank app and visit the Home Loans section, or book a specialist call via /contact.

This article is general information only. Rates are subject to change. Consider your own objectives before refinancing any credit facility.