Should You Refinance When Rates Are Rising?

Last updated: November 2026

Many people think refinancing only makes sense when rates are falling. Often the opposite is true. When rates rise, the gap between what loyal customers pay and what new customers are offered can grow. That gap is money you could keep.

This page is about the fourth C of credit: Conditions. It’s the part of your loan you can’t control, but you can plan around.
Read the full guide to the 4Cs.

What "conditions" means for your home loan

Conditions are everything happening outside your own finances that affects your loan. That includes:

Interest rates: what the Reserve Bank does, and how each lender passes it on
Lender rules: the buffers they test you at, the property types they like, and the borrowers they want more of
The property market: whether values in your area are rising or falling
The economy: jobs, inflation and how cautious lenders are feeling

You can’t change any of these. But they change all the time, and they change differently at each lender. That’s why the right lender this year may not be the right lender next year.

What's changed in 2026

On 3 November 2026 the Reserve Bank lifted the cash rate to 4.85%. It was the fifth rise this year and the highest level since 2008. For most variable borrowers, repayments have gone up every time.

At the same time, lenders haven’t all moved in step. Some have competed harder for new customers, with sharper rates and refinance offers. Others have quietly left existing customers on higher rates. If nobody has looked at your loan this year, it’s worth checking.

When refinancing can make sense

You’re on a variable rate and haven’t had a rate review in the last 12 months
Your property has gone up in value, so you may be in a cheaper LVR tier
Your income has grown or your other debts have dropped since you first borrowed
You’re paying for a package or features you don’t use
Your fixed rate is ending soon and you’re about to roll onto a higher variable rate
You want to consolidate higher-interest debts like a car loan or credit cards

When it might not make sense

You’re in a fixed rate with high break costs. Sometimes waiting until the fixed term ends is cheaper.
You’d need Lenders Mortgage Insurance (LMI) again. If you’d be borrowing over 80% of the property’s value, the cost can wipe out the saving.
You’re planning to sell soon. Switching costs may not pay for themselves.
The saving is small. If your current lender will match a sharper rate, staying can be the simplest win.

What if you can't pass a new lender's test?

Lenders test your repayments at a higher rate than you’ll actually pay, Banks use 3% above your rate. Many non-bank lenders use 2%, and some go lower for like-for-like refinances. After several rate rises, some borrowers who can comfortably afford their current repayments struggle to pass that test with a new lender.

If that’s you, there may still be options. Some lenders have policies for like-for-like refinances, where you aren’t borrowing more and your repayments go down. Policies change often, so it pays to have a broker check what’s available right now. Read how lenders work out what you can borrow.

If you’re already finding repayments hard to keep up with, talk to your lender’s hardship team early, or call the free National Debt Helpline on 1800 007 007.

How to check your options in 15 minutes

Find a recent loan statement. It shows your rate, balance and lender.
Book a free Credit Ready Check. We look at your 4Cs and compare 60+ lenders.
Get a written answer. What you could save, what it would cost to switch, and whether staying put is the smarter move.

FAQs

Is it a bad idea to refinance when rates are rising?

Not necessarily. Rising rates often make it more worthwhile to check, because lenders compete hard for new customers.

Should I fix my rate now?

It depends on your plans, your budget and how much certainty you want. A broker can show you the trade-offs, but no one can promise where rates will go.

How long does refinancing take?

Usually around 4 to 6 weeks from application to settlement, depending on the lender and how quickly your paperwork comes together.

Will my bank lower my rate if I ask?

Sometimes. We can help you ask, and show you what other lenders would offer so you’re negotiating with real numbers.

Albert Waldron is a Credit Representative (407514) of Australian Finance Group Ltd, Australian Credit Licence 389087. This is general information only and does not take into account your personal circumstances. Please seek advice before acting. Credit Ready Check is a free lending review, not a credit repair service.