Refinance enquiry volumes through the broker partner network are up 38 per cent week-on-week since the Reserve Bank lifted the cash rate to 4.35 per cent on Tuesday. The increase is roughly evenly split between borrowers who fixed in 2021 and 2022 (now reverting to elevated variable rates) and borrowers on existing variable products who are responding to the third 2026 hike. The cohort that has been most absent from refinance volumes for two years (mid-loan-life borrowers with offset balances and stable income) is also returning to the conversation, prompted by a widening gap between major-bank standard variable rates and what is available on the broker panel.
For the first time since the cashback wars ended in mid-2024, all four major banks are advertising cashback offers on refinance applications above $250,000. CBA is offering $2,000 cash on settlement, NAB and Westpac are at $2,000, and ANZ is at $3,000 on loans above $500,000. Customer-owned banks and digital lenders have responded with cashback offers in the $1,500 to $4,000 range, often with shorter clawback windows than the majors. The cashback environment is the most competitive it has been in two years; the rate environment is also the most expensive it has been in two years.
Reading a cashback offer honestly
A $3,000 cashback on a $600,000 loan looks meaningful in isolation. The honest read is the after-cashback effective rate over your expected hold period of the loan, compared against the lowest non-cashback rate available on the panel. If the cashback offer prices the loan at 6.34 per cent and the lowest panel rate is 6.04 per cent, the 30 basis-point gap costs you about $1,800 in extra interest in year one alone. The cashback covers it, but only barely; in year two you are paying for the cashback again, and again in year three. Over a five-year hold the cashback cost you, not saved you, money.
The pattern that pays off cashback is short-hold refinancing. Borrowers who genuinely intend to refinance again within 18 to 24 months can take a cashback offer at a slightly elevated rate and come out ahead, provided the new lender does not impose a clawback. Most cashback offers in May 2026 do impose clawback if you exit within 24 months, typically the full cashback amount plus the discharge fee. Read the term in the contract, not in the offer document.
The decision rule on cashbacks is hold-period sensitivity. If you would refinance in 18 months either way, take the cashback. If you would settle in for five years, take the lowest rate.
Where the rate gap is widest
The gap between the cheapest-on-panel variable and the cheapest-major variable for a prime owner-occupier with an LVR below 80 per cent is currently between 0.45 and 0.65 per cent. On a $600,000 loan that gap is $135 to $195 a month, or $1,620 to $2,340 annually. Customer-owned banks and most non-bank ADIs sit at the cheap end of that range. The four majors all sit at the expensive end, even on heavily discounted SVR. The difference is not new; it has widened since the start of the rate-hike cycle because the majors have prioritised net interest margin protection over share growth.
For investor and SMSF loans the gap is wider, typically 0.55 to 0.85 per cent between major and non-major. For interest-only loans the gap can extend past 1.00 per cent. For low-deposit (sub-20 per cent LVR with active LMI) loans the gap is narrower because the LMI premium is the dominant cost; the rate matters less than the LMI saving from sticking with the original lender or refinancing without rebooking LMI.
When refinancing does not pay
Three situations where the refinance maths still does not work, even at current rate gaps. First, fixed-rate loans with significant break costs. If your fixed term ends in less than 12 months, the break fee usually exceeds the rate saving over the period to expiry. Second, loans where LMI was capitalised and is being amortised across the term. Refinancing crystallises the LMI cost; the saving on rate has to be large enough to amortise that crystallised cost across the new loan's term, plus cover the cost of new LMI on the same property. Third, very small remaining loan balances, typically under $200,000, where discharge fees, settlement fees, and the time cost of the refinance process exceed the rate saving over the loan's remaining life.
How to actually run the process this quarter
- Pull your most recent loan statement and identify the exact rate, balance, and remaining term. Note your offset and redraw balances; both transfer with most refinances.
- Run the refinance calculator with conservative assumptions: 12-month hold period and 0.30 per cent rate saving. If the maths works at those numbers, refinancing is robust to most outcomes.
- Get one comparable rate quote from a broker covering the customer-owned, non-bank, and major-bank panels. The broker quote should include both rate and any cashback, and the after-cashback effective rate over a five-year horizon.
- Negotiate with your existing lender. Most retention teams will discount existing customers by 0.10 to 0.30 per cent within 48 hours of a credible refinance threat. The discount is rarely as deep as the broker-channel rate, but it is fee-free.
- If you proceed with a refinance, prepare the documentation pack: ID, three recent payslips, six months of bank statements, council rates / strata, the most recent loan statement. Quality of pack determines speed of approval.