Home Loan repricing versus refinancing: How to save money in a rising rate environment

In May 2023 the Reserve Bank of Australia (RBA) announced a further hike to the cash rate from 3.60% to 3.85%.

This was the 11th increase to the cash rate in approximately 12 months and a total of 3.75 percentage points up from a record-low of 0.1% back in May 2022.

Alongside the cash rate increases we’ve seen substantial corresponding home loan interest rates increase across the board for both fixed and variable rates.

If you currently have a variable-rate loan no doubt you will already have felt the hit to your hip pocket, but there are options available to help save money.


How much of a difference could lowering your interest rate make?

Let’s look at two loan amounts as an example.

From May 2022 until May 2023, homeowners on variable-rate loans could have seen interest rate hikes of around 3.75 percentage points, depending on their loan. What does this look like in repayments?

If you had a $500,000 loan with monthly principal and interest repayments over a 30-year term and your interest rate increased from 3% p.a. to 6.75% p.a., your repayments would have increased from $2,108 to $3,243 – an increase of $1,135. If that loan was $1 million, repayments would have increased from $4,216 to $6,486 – an increase of $2,270.

So, what difference can negotiating a lower interest rate make to your repayments?

Decreasing interest rates from 6.75% p.a. to 6.5% p.a. would reduce monthly repayments by:

Decreasing interest rates from 6.5% p.a. to 5.5% p.a. would reduce monthly repayments by:

When I look for a better interest rate for my clients, there are a number of ways I can go about it. First, I can look to negotiate or reprice with your current lender because no-one wants to pay loyalty interest!

Alternatively, I can look at the broader market at over 60 banks and secure lenders to see if you refinancing elsewhere is a better option. 


Repricing versus refinancing

When we negotiate with your current lender to get you on a better deal, that is called repricing. This can be a straightforward process and your interest rate or fees change, but the lender remains the same.

If we find you a better deal with a different lender and move you across, it is called refinancing. Some lenders offer lower interest rates to new customers, and/or cashback incentives where they offer money for you to move your loan to them – although we are starting to see the phasing out of these offers as the cost of funding increases. Either way, such offers need to be weighed up with any potential fees charged in the change. We will run a detailed calculation for you and let you know if it would be beneficial for you over the longer term.


Beyond interest rates

Another thing to keep in mind is that interest rates aren’t the only way to save you money. Lenders also charge fees depending on your deal. A thorough evaluation of your current loan will assess whether the features are still serving you. For example, if you have a package deal that includes a credit card and offset account, moving to a more basic loan that offers a free redraw facility could still suit your needs but potentially save you money in fees.

Getting a better deal on your home loan starts with a simple phone call or text so, let’s get started!  



THE FINEPRINT: The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. While all care and attention are taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.

Green Finance Group Pty Ltd ACN 145 035 221 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.

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Meet the Author

"As an experienced banker, I have an excellent understanding of bank policy and process and know what it takes to help my clients discover a better home, business or personal funding solution."

Carlo Ponturo

Finance Consultant

Fortitude Valley, Brisbane

An accomplished finance professional offering clients a depth of knowledge gained from more than a decade in the banking and finance industry.

My career in banking and finance spans over a decade and has seen me work in all facets of credit and lending where I’ve helped hundreds of homebuyers and refinancers whether it be to get into a new home, build a property portfolio, or simply get a better deal on their existing finance.