When should you refinance? Navigating RBA rate cuts and loyalty rates

The RBA rate cuts: what they mean for home owners

The Reserve Bank of Australia (RBA)’s decision to cut rates three times this year – or by a total of 0.75% – has been welcome, particularly as these drops were the first since November 2020.

How RBA changes affect mortgage rates

With rates at 3.6%, variable (but not fixed – unless you’re prepared to pay a break fee cost) loan holders should now be enjoying lower interest rates.

The Big 4 Banks have followed the RBA’s lead in this way, with the latest 0.25% cut in August seeing rates for standard variable loans dropping to between 5.59% at Commonwealth Bank and 6.49% at ANZ.

But if you’re not sure which is the best rate and loan for you, talk to a mortgage broker.

Timing your refinance around rate cuts

Both fixed and variable home owners should regularly check their loans to ensure they’re satisfied with them. But variable loan holders should also double-check these details before and after the near-monthly RBA rate decisions, as rate changes will also affect your loan.

Understanding loyalty rates

Loyalty rates aren’t actually taxes, but they can feel like that to long-term home owners. Lenders also aren’t the only ones to charge such rates with major organisations such as utility, internet and insurance providers also doing this.

What are loyalty rates?

Lenders love to lure home owners into beginning a home loan via a budget-priced rate. But instead of rewarding these buyers for sticking with them long term, lenders charge them with higher rates down the track.

The hidden cost of staying with your lender

Lenders charge these rates because they know there are many careless loan holders who don’t regularly inspect their loans.

Yet even a tiny loyalty tax can end up costing you extra money and the longer you don’t check your loan, the larger these costs will be.

Is now the right time to refinance?

While there’s no 100% perfect time to refinance, RBA rate decisions can be an ideal time to do this. Or, at the very least, it’s a great time to double-check your loan.

Signs you should review your home loan

Major changes in your everyday life, such as unexpectedly losing or finding a job, getting a divorce, or having a baby, are key reasons for a loan review.Here at Intuitive Finance, we advise a review or refinance if you’ve been with the same lender for over two years; your property’s value has notably increased; your interest rate is now 6% or over; or you’ve been paying lender’s mortgage insurance (LMI) for a long time.

Benefits of refinancing in a low-rate market

We’re now enjoying the lowest national cash rate since April 2023 – but even if your lender has passed on the full 0.75% of this year’s rate cuts, you should never neglect your loan. Firstly, you may still be paying loyalty taxes with your current loan product or lender.

Secondly, there’s more benefits to refinancing in our current low-rate market than in usual. Rate cuts equal highly competitive lenders, who are keen to give you more bang for your loan buck if you refinance to one of their products. Even a 0.5% rate drop can mean a major difference to your mortgage repayments and in turn, the life term of your loan.

Our mortgage broker team would always suggest you at least chat to your current lender to see what better rates they can offer you.

Refinancing tips for 2025

If you’re planning to refinance this year, here’s what you should consider to make sure this loan change worth your while.

How to compare loan options

Don’t just check for cheaper rates – check for other inclusions and options, such as offset accounts and redraw facilities. If you want specific elements in your borrowing arrangemnets, make sure you obtain them in your new loan.

Check with the lender that your new rate isn’t based on a full 30-year mortgage term, but on what your remaining term is now.

Don’t forget you’ll have to pay refinancing costs. These can include settlement, application, and valuation fees plus ongoing regular loan fees. These monies can seem small at the time, but they can quickly add up.

Working with a mortgage broker

Working with our mortgage broker specialists can negate all these costs and stresses, and give you more time to enjoy life. Our team will call your current lender and others as well, to ensure you switch to the best loan for you.

Final thoughts

With more rate cuts expected this year and next year, variable loan holders explore refinancing now.

Don’t let loyalty cost you

If nothing else, you can check what loyalty taxes your lender is hiding from you. Don’t be afraid to openly ask them how much they’re charging and, either way, ask for a better rate or more inclusions.

If they can’t help you, refinance.

Take control of your mortgage

Like every other bill in your life, you should know exactly how and what you’re paying for with your home loan. If you’re not sure about anything, contact your lender, and if you’re not satisfied with their reply, organise a refinance to someone else.

If you are nervous about talking to your lender, we’re happy to do it for you. We always enjoy exploring different lenders and loans and most of all, we like saving you time and money. So, if you’ve got questions or concerns, just reach out to us.

Take control of your mortgage – speak to a broker today and see if refinancing could save you thousands.

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Andrew Mirams

Andrew Mirams is the Founder and Managing Director of Intuitive Finance, a highly respected and multi-award winning Mortgage Brokerage dealing with clients all over Australia and around the world. Andrew has over 30 year’s experience in the finance industry and has assisted clients to secure over $2 Billion in mortgage lending over his time. Intuitive Finance deals with all aspects of lending from helping first homebuyers, someone wanting to upgrade their home or starting out and experienced investors looking to secure that next investment property, we can assist with all those requirements. We also specialise in working with self-employed clients and getting them the best outcomes, along with Commercial and Asset finance solutions. Intuitive Finance is highly regarded in the industry and has been recognised as a national winner of the MFAA customer service award and also one of the finance industry’s top mortgage employers. Our brokers also feature regularly in the Top 100 mortgage brokers list in Australia.