Nearly Half of Australian Mortgage Holders Cannot Refinance — What Non-Bank Lenders Offer in 2026

Key takeaway: New research published 24 September 2026 by The Adviser reveals that almost 50% of mortgage broker clients in Australia are unable to refinance due to bank serviceability hurdles — not because they can't afford repayments, but because rigid bank assessment formulas exclude them. Non-bank lenders with flexible income assessment may provide a viable path forward.

Why Nearly Half of Broker Clients Cannot Refinance

Australia's mortgage market is facing a quiet crisis: borrowers who are comfortably servicing their existing loans are being denied the opportunity to refinance to a better rate. Research cited by The Adviser on 24 September 2026 reveals that approximately half of all broker clients now face serviceability barriers when applying to refinance with a major bank.

The core issue lies in how lenders calculate borrowing capacity. Banks are required by APRA to assess new loan applications — including refinances — using a "serviceability buffer" typically set at 3 percentage points above the actual loan rate. With the RBA holding the cash rate at 4.35% (effective August 2026), this means many refinance applications are assessed at rates above 7%, even when the borrower would actually be repaying at considerably lower rates.

The Serviceability Trap: How Borrowers Get Stuck

Rising unemployment — which the ABS measured at 4.6% in August 2026 — has made banks even more cautious in credit approvals. Meanwhile, with annual CPI running at 3.5% (ABS, July 2026), many household budgets are stretched, further complicating the serviceability picture even for borrowers who are not in financial difficulty.

For self-employed Australians and those with non-traditional income, the problem is compounded. Banks often use conservative income figures from tax returns, which may not reflect current earning capacity — particularly for business owners who manage their declared income for tax purposes.

"The serviceability buffer was designed to protect borrowers from rate shock, but for many Australians it has become a wall that prevents them from accessing a better deal even when their financial position is sound."

How Non-Bank Lenders Assess Refinancing Differently

Non-bank lenders like MPFG Capital operate outside the major bank framework and can apply more nuanced assessment methodologies. For self-employed borrowers, non-bank lenders can accept alternative documentation — BAS statements, accountant letters, or business bank statements — in lieu of tax returns. This is commonly known as an Alt Doc (alternative documentation) assessment.

Key differences in non-bank refinance assessments include:

• Income verification: BAS statements, accountant letters, or 6–12 months of bank statements accepted
• Assessment approach: May take a more holistic view of the borrower's demonstrated repayment capacity
• Loan size: Non-bank lenders can refinance loans up to $7.5 million for eligible borrowers
• LVR flexibility: Options available for higher loan-to-value ratios in some circumstances

What This Means for Australian Borrowers — MPFG's View

If your refinance application has been declined by a major bank, it does not mean you are in financial difficulty or that refinancing is impossible. It may simply mean your application doesn't fit within the specific mathematical formula a bank uses.

MPFG Capital specialises in helping borrowers who fall outside the major bank criteria — including self-employed clients, small business owners, and those with complex income structures. Our Easy Refinance product can assist with residential loan refinances up to $7.5 million, and our team includes Mandarin-speaking consultants to support the Chinese-Australian community.

If you've been told "no" by a bank, speaking to a specialist non-bank lender is a practical next step — not a last resort.

FAQ

Why was my refinance application rejected even though I make all my repayments on time?

Major banks assess refinance applications using a serviceability buffer — they test whether you could afford repayments at a rate roughly 3% above your actual rate. Even if you have a perfect repayment record, the buffer calculation can result in rejection. A non-bank lender may apply a different assessment framework and reach a different outcome.

Can a non-bank lender refinance my loan if I am self-employed?

Yes. Non-bank lenders commonly accept alternative documentation — BAS statements, accountant letters, or business bank statements — instead of tax returns. This makes refinancing accessible for self-employed Australians whose declared income doesn't fully reflect their borrowing capacity.

What is the maximum loan size MPFG Capital can refinance?

MPFG Capital's Easy Refinance product can assist with loans up to $7.5 million for eligible borrowers, subject to credit assessment and individual lending criteria.

This article is general information only and does not constitute financial or credit advice. All applications are subject to credit assessment by MPFG Capital (ACL 553698).