ABA Report: Refinancing Competition Is Saving Borrowers Real Money — Are You Getting Your Share?

ABA Report: Competition Is Saving Borrowers Real Money

The Australian Banking Association's latest banking sector report, released this week, delivers a clear message: competition in Australia's lending market is working — and it's generating real financial savings for borrowers who take action. But the same report highlights a persistent gap: millions of Australians have not taken advantage of the competitive landscape, leaving significant savings unclaimed.

What the ABA Report Found

The report identified four major trends shaping Australia's banking sector in 2026:

1. Record Refinancing Activity

Australians are refinancing at elevated rates as borrowers seek to reduce their interest burden in the current high-rate environment (cash rate: 4.35%). Refinancing has become the primary mechanism through which household borrowers are responding to persistent rate pressure.

2. Competition Delivering Real Savings

The competitive dynamic between the major banks, regional banks, and non-bank lenders is producing meaningful interest rate reductions for borrowers who actively switch. The report confirms that shopping around genuinely pays off.

3. Construction Finance Headwinds

New residential construction financing remains constrained, reflecting broader challenges in the building sector — including material costs, labour shortages, and reduced developer confidence amid market uncertainty.

4. Rising Hardship Support

More borrowers are accessing financial hardship arrangements — a signal of ongoing stress in some household segments, even as the economy grows modestly.

Why Millions Are Still Missing Out

If competition is working, why are so many borrowers still on uncompetitive rates? Several barriers persist:

Time and complexity. Refinancing requires documentation, lender assessment, and legal work. For busy households, the process feels daunting even when the financial case is compelling.

Self-employed borrowers are systematically excluded. Major banks apply strict income verification standards that effectively lock out many self-employed Australians. If you can't provide 2 years of tax returns showing consistent income, most banks won't refinance you — even if you're running a profitable business.

Inertia. Many borrowers simply don't know what rate they could be paying. The ABA report implicitly acknowledges this: the savings are available, but capturing them requires active engagement.

The Non-Bank Refinancing Advantage

Non-bank lenders operate outside the APRA-governed assessment floors that constrain major banks. This creates significant flexibility for borrowers who don't fit the standard mould:

• Alt Doc refinancing: Use BAS statements, accountant letters, or business bank statements rather than two years of tax returns. Particularly relevant for self-employed borrowers whose reported income fluctuates or is structured through a company or trust.
• Faster turnaround: When a fixed-rate period is ending and the clock is ticking, non-bank lenders typically process applications faster.
• More creative structuring: Non-banks can sometimes accommodate investment properties, multiple income streams, or slightly imperfect credit histories more flexibly.

Practical Steps for Borrowers

The ABA report's findings translate into a direct action item for Australian borrowers. If you have a home loan, now is the time to assess your position:

Step 1 — Know your current rate. If you don't know your exact interest rate, call your lender today and ask. Compare it to what's available in the market.

Step 2 — Identify your income documentation type. If you're employed with payslips, you have maximum options. If you're self-employed, explore Alt Doc lenders specifically.

Step 3 — Get a quote. Many non-bank lenders offer indicative assessments without affecting your credit file. Find out what you could access before committing.

Step 4 — Act before August. With the RBA's next meeting on 11 August 2026, there's a possibility of further rate movement in either direction. Refinancing before that decision reduces uncertainty.

At MPFG Capital, we specialise in helping self-employed borrowers, new migrants, and those with complex income structures access competitive refinancing options that the major banks won't offer. If the ABA report's finding — that competition is generating real savings — is true, it's worth finding out whether that saving is available to you.

This article is for informational purposes only and does not constitute financial advice. Loan approval is subject to lender assessment and individual circumstances. Speak with a licensed mortgage broker about your specific situation.