Banks are adopting increasingly aggressive tactics to retain customers, as new data from Money.com.au reveals a notable rise in internal refinancing among homeowners.
According to the Australian Bureau of Statistics, internal refinances constituted 35 per cent of all home loan refinances in the year to March 2025, marking the highest share since records began in September 2020 and surpassing the four-year average of 30 per cent.
This translates to 194,898 loans being refinanced with the same lender out of a total of 554,820 refinanced loans over the year, with the remaining 65 per cent involving borrowers switching to new lenders.
Jacob Overs, General Manager of Lending at Money.com.au, said banks were increasingly deploying aggressive strategies to retain existing customers.
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“Banks used to reserve their best rates for new customers, but now they’re quietly offering them to existing borrowers who threaten to leave, just so they don’t have to make those deals public and apply them across the board. It’s saving them millions of dollars across their loan books,” he said.
“Some banks, particularly the Big Four, won’t even let you submit a discharge form online. “You have to call and request it, which conveniently funnels you straight to their retention team – the only team with access to rates that aren’t advertised anywhere.
“Brokers now submit the majority of refinance applications and, under their best interest duty (BID) they’re recommending a lower rate than what the borrower’s currently on. So they prepare a credit proposal with a new lender offering a sharper deal, but the moment the discharge form is submitted, the borrower’s current lender often swoops in with a last-minute retention offer.”
Threatening to put your money elsewhere could see you score a better deal with your bank.
Mortgage Expert Debbie Hays adds: “I recently had a client who was refinancing from one of the Big Four to Macquarie Bank. As soon as we submitted the discharge request, their existing lender came back with aggressive pricing and a $2000 cashback offer, none of which was advertised anywhere,” she said.
“It’s a reactive move, but it’s happening more and more. We’re seeing a lot with larger loans of above $750,000.”
What can trigger better rates from your own lender
Overs says borrowers can get a better interest rate from their existing lender if they meet certain conditions, even without switching banks. These include:
Your LVR is lower
If you’ve built up a good repayment history, your loan amount as a percentage of your property’s value (known as your loan-to-value ratio or LVR) will likely be lower than when you first took out your mortgage. As a result, you’ll be considered a lower-risk borrower –which means you’d qualify for a lower interest rate from your lender. It’s worth noting that if your loan amount is under $150,000, lenders are typically less motivated to retain your business.
You signal your intent to switch lenders
Interest rates are falling, and competition among banks is heating up. Lenders are more willing to cut deals to keep existing customers from leaving.
Your lender may also have internal rate tiers or retention offers that aren’t publicly advertised. These are often only triggered when you submit a discharge form or are transferred to a retention team. This gives you access to sharper, behind-the-scenes pricing.
You have multiple loans with your lender
If you have multiple loans with the same lender like a home loan and an investment property loan, you may be in a stronger position to negotiate a better rate with your lender.
Lenders are more likely to offer discounts to retain borrowers with larger, bundled loan portfolios.
Internally refinancing also means you could avoid paying refinancing fees on multiple loans.
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