Can You Still Refinance After Four Rate Rises? A Guide for Newcastle and Lake Macquarie Borrowers

Australians are switching lenders at close to record levels. In the June quarter of 2026, owner-occupiers refinanced $41.9 billion of home loans to a new lender, across 66,449 loans, according to the ABS. After four rate rises this year, the reason is obvious: the gap between what loyal customers pay and what new customers are offered has become worth chasing.

But in my conversations with borrowers across Newcastle, Lake Macquarie and Charlestown, more people are running into a problem nobody warned them about. They have never missed a repayment, their lender is charging them more than it offers new customers, and when they try to leave, a new lender says no.

This article explains why that happens, who is most likely to be affected, and what you can do about it. The short version: the same rate rises that make refinancing attractive also make it harder to qualify.

Why Rate Rises Can Lock You In

When you apply to refinance, the new lender assesses you as if you were a brand-new borrower. That includes the serviceability buffer. Under APRA’s rules, banks must test whether you could still afford the loan at your interest rate plus 3 percentage points. APRA reviewed its lending settings in May this year and left that buffer unchanged.

So every rate rise increases the repayment you are tested on, not just the one you pay. A typical variable rate of around 6.29 per cent means a new lender now tests you at about 9.29 per cent. In January, before this year’s four rises, the same test was run at about 8.29 per cent.

Monthly principal and interest repayments over 30 years. Illustrative only. Each lender sets its own assessment rate, which is at least your rate plus 3 percentage points, and may be higher.

Put another way, if your income and expenses have not changed since January, the loan a new lender will approve you for is about 8.7 per cent smaller than it was then. If your loan was already close to your limit, that can be enough to tip you from “approved” to “declined”. It does not matter that you have been making the real repayments comfortably.

Your current lender does not need to put you through that test again to keep you, because you are already its customer. That is exactly why some borrowers end up paying more than they should: they are, in effect, held in place.

Who Is Most Likely to Be Stuck

• People who borrowed close to their maximum. If you bought in 2021 or 2022 at the edge of your borrowing capacity, there is little room left once the test rate rises.
• Households whose income has not kept pace. A drop to part-time work, parental leave, or income that has stayed flat while living costs climbed all reduce what you can service.
• Anyone carrying other debt. Car loans, personal loans, buy now pay later accounts and credit cards all count. Lenders assess credit cards on the limit, not the balance, so an unused $20,000 card still reduces what you can borrow.
• Borrowers whose property value has slipped. Newcastle and Lake Macquarie values have fallen every month since April. If that has pushed your loan above 80 per cent of the property’s value, your options narrow further. We cover this in what refinancing actually saves Hunter borrowers.

Five Things You Can Do If You Can’t Switch

1. Ask your current lender to reprice

This comes first because it does not involve a new application. You are asking your lender to move your rate closer to what it offers new customers. No serviceability test, no valuation, no credit enquiry. Lenders have retention teams for exactly this, and a request backed by a real competing offer carries more weight. If you cannot switch, you may not have that offer, but the request is still free and often works.

2. Ask about “like-for-like” refinancing

In 2023, several major banks introduced refinance assessments using a smaller buffer for borrowers who met strict conditions. Commonwealth Bank, for example, launched a “Refinance Alternate Assessment” using a 1 percentage point buffer. To qualify, borrowers needed a clean 12-month repayment record, a principal and interest loan with no lenders mortgage insurance, and a new loan no bigger than the existing one. Westpac introduced a similar streamlined refinance policy.

APRA allows banks to approve loans outside their normal rules as exceptions, but expects those exceptions to stay “prudent and limited.” Lender policies like these change often and the conditions are narrow, so treat them as something to ask about, not something to count on. The table above shows the difference a smaller buffer makes: on a $650,000 loan, a 1 percentage point buffer tests you at about $4,452 a month instead of $5,366.

3. Reduce what counts against you

This is often the quickest win. Closing credit cards you do not use, lowering limits on the ones you keep, and paying off a small car or personal loan can all lift your assessed borrowing capacity. Nothing else about your finances changes. Do this before you apply, not after being declined.

4. Look beyond the banks, carefully

APRA’s buffer applies to banks and other authorised deposit-taking institutions. Non-bank lenders are regulated by ASIC under responsible lending laws and set their own assessment rates, and some use a smaller buffer. Their rates are not always sharper, so a smaller buffer is only useful if the overall deal still leaves you better off.

5. If the repayments themselves are the problem

If you are trying to refinance because you are struggling to keep up, not just to get a better deal, refinancing may not be the right tool. Your lender has legal obligations to consider a hardship request. Read what to do if you are struggling with your mortgage for your rights and for free local help.

Find Out Where You Stand Before You Apply

The worst way to discover you cannot refinance is to apply and be declined. Credit applications are recorded on your credit report, and Moneysmart notes that your credit score takes into account the number of credit applications you have made. Applying to several lenders one after another is exactly what you want to avoid.

A better order is:

1. Run your income, expenses and debts through our borrowing power calculator. It applies the same 3 per cent buffer lenders use, so it gives you an early read on whether a new lender would approve your current balance.
2. Ask your current lender to reprice. That costs nothing and needs no application.
3. If you still want to switch, have a broker check your position against specific lenders’ policies before any application is lodged, so the one application you make is the right one.

If you are in Lake Macquarie, our refinancing in Lake Macquarie page covers the local detail, and our main refinancing page explains how the process works from start to settlement.

Frequently Asked Questions

Stuck? Let’s Work Out Why

Being declined, or suspecting you would be, doesn’t mean you are stuck for good. Usually one or two specific things are holding the application back, and most can be fixed or worked around once you know what they are.

Want to find out whether you can refinance before you apply? Call David on 0417 676 191 or get in touch via our contact form.

This article is general information only and does not take into account your objectives, financial situation or needs. Figures are illustrative and current as at the date of publication. Lender policies, including any reduced-buffer refinance policies, change regularly and are subject to eligibility criteria. Please seek advice specific to your circumstances before acting.

Sources

• Australian Bureau of Statistics, Lending indicators, June Quarter 2026, released 14 August 2026.
• APRA, APRA maintains current macroprudential policy settings, 28 May 2026.
• APRA, Housing lending standards: reinforcing guidance on exceptions, 9 June 2023.
• Savings.com.au, CBA lowers serviceability test to 1% for some borrowers, 22 June 2023.
• Savings.com.au, Westpac reduces stress test for home loan refinances, May 2023.
• Moneysmart, Credit scores and credit reports.
• Reserve Bank of Australia, Monetary Policy Decision, 29 September 2026.