Major Banks Offer Cash to Block Refinancers — What It Means for Borrowers Considering a Switch

Major Banks Offer Cash to Block Refinancers — What It Means for Borrowers Considering a Switch

Australia's major banks are quietly offering cash retention payments and rate discounts to stop borrowers from switching lenders — a practice that mortgage brokers are calling deceptive and damaging to borrower trust.

What Is Happening?

Reports published on 20 April 2026 by industry publication The Adviser reveal that at least one major bank has been contacting borrowers directly with retention offers — cash payments combined with interest rate reductions — timed specifically to discourage refinancing through mortgage brokers.

Brokers say this behaviour undermines the trust relationship between borrowers, brokers, and lenders. The practice raises a fundamental question: if a bank can offer a better deal to prevent you from leaving, why wasn't that deal offered in the first place?

Why Banks Are Doing This

The Australian home loan market has become intensely competitive. The RBA cash rate stands at 4.10% as of March 2026, with the next monetary policy decision due on 5 May 2026. Borrowers have become increasingly rate-savvy, and broker-originated loans now account for more than 70% of new residential mortgages nationwide.

Banks know that once a borrower engages a mortgage broker, the probability of switching rises sharply. Retention payments are a defensive tactic to interrupt that process before a comparison is made.

What This Means for Borrowers

If you are currently with a major bank, receiving a retention offer does not mean you have the best deal available — it means the bank has calculated that offering you something is cheaper than losing you entirely. Always compare any retention offer against what non-bank lenders and smaller institutions can provide before accepting.

If you have previously been declined by a major bank, retention payments are entirely irrelevant to your situation. Non-bank lenders such as MPFG Capital operate under different lending frameworks and can approve borrowers who fall outside major bank credit policies — particularly self-employed borrowers, new migrants, and those with non-standard income documentation.

The Structural Difference Between Banks and Non-Bank Lenders

Non-bank lenders are not subject to the same APRA-mandated capital ratio requirements as authorised deposit-taking institutions. This structural difference translates to practical advantages:

• Greater income flexibility: Alt Doc products allow qualification via BAS statements, accountant's letters, or bank statements — no payslips required
• Higher LVR options: For the right borrower profile, non-banks can lend at ratios that major banks have tightened
• Faster decisions: Without the bureaucracy of large banking institutions, approvals can move significantly faster

The retention payment story is ultimately a reminder that the major banks' interests and borrowers' interests do not always align. A qualified mortgage broker, working with bank and non-bank options, provides the clearest picture of what the market genuinely offers.

Information provided is general in nature and does not constitute financial advice. Credit eligibility is subject to individual assessment. MPFG Capital ACL 553698.