Refinancing in a Rising Rate Market: What You Need to Know

With interest rates climbing over the past couple of years, many Aussie homeowners are feeling the pinch. Monthly repayments are higher, household budgets are tighter, and the uncertainty about where rates will go next has many people wondering if refinancing could help.

The truth is, refinancing in a rising rate market can be both a smart move and a risky one, it all comes down to your timing, your goals, and the options available. Here’s what you need to know before making the call.

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Why Homeowners Consider Refinancing During Rate Hikes

Refinancing simply means replacing your current home loan with a new one, either with your existing lender or a different one. In a rising rate environment, homeowners might look to refinance for:

  • Locking in a better deal – even with rates going up, lenders often have different offers, and some may still be more competitive than your current loan.
  • Switching to a fixed rate – to protect against further rate increases.
  • Accessing equity – to fund renovations, investments, or consolidate higher-interest debts.
  • Adjusting loan features – like adding an offset account or changing repayment frequency.

The Pros of Refinancing When Rates Are Rising

Even in a higher-rate climate, refinancing can work to your advantage:

Potentially Lower Your Rate
Just because the cash rate has risen doesn’t mean all lenders are offering the same rate. Switching could still shave a few basis points off your repayments.

Gain Rate Certainty
Moving to a fixed-rate loan can give you peace of mind for the next 1–5 years, knowing exactly what your repayments will be.

Improve Loan Flexibility
You might unlock features like offset accounts, redraw facilities, or split loans that your current loan doesn’t offer.

Consolidate Debt
Rolling higher-interest debts (like credit cards or personal loans) into your home loan can simplify your finances and reduce overall interest.

The Risks and Considerations

Here’s what to weigh up before making the move:

  • Break Fees and Discharge Costs
    If you’re on a fixed-rate loan, breaking it early could trigger hefty exit fees.
  • Potential for Higher Rates
    If you lock in a fixed rate and the market unexpectedly shifts down, you could miss out on lower repayments later.
  • Extended Loan Term
    Resetting to a new 30-year term could lower repayments now but cost more in total interest over the life of the loan.
  • Credit Impact
    Multiple refinancing applications in a short period can affect your credit score.

How to Decide If Refinancing Is Right for You

Ask yourself:

  • Has my lender passed on every rate rise in full?
  • Could I get a more competitive deal elsewhere?
  • Do I need certainty over my repayments?
  • Am I planning to sell or significantly change my loan in the next few years?
  • What are the costs versus the savings over the short and long term?

Refinancing Strategies in a Rising Rate Market

If you do decide to refinance, these strategies can help you get the most out of it:

Consider a Split Loan
Fix part of your loan for stability and keep part variable to take advantage of any future rate drops.


Negotiate Before You Switch
Sometimes your current lender will offer you a sharper deal to keep your business.

Keep the Term Shorter
Instead of resetting to 30 years, keep your current term to save on interest over time.

Review Features, Not Just Rates
An offset account, extra repayment flexibility, or fee waivers can sometimes outweigh a slightly lower rate.

Thinking about refinancing?
Let’s chat about your options and see if it could save you money, reduce your stress, and set you up for the years ahead. Contact BrokerCo today! 

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