Refinancing surged in March quarter 2026 as Australian borrowers responded to RBA rate rises. Learn what the ABS data means for your lending strategy.
Australian borrowers are sending a clear message in response to rising interest rates, and that message is coming through loudest in the refinancing data. The latest ABS lending indicators reveal a significant shift in borrower behaviour during the March quarter 2026, as property owners moved quickly to reassess their loan arrangements following the Reserve Bank of Australia’s February and March rate increases.
While overall lending activity has softened, refinancing activity tells a different story altogether. For borrowers and investors alike, understanding these trends is essential for making informed decisions in a dynamic rate environment.
The March quarter 2026 data paints a picture of a lending market adjusting to tighter monetary policy. Total dwelling loans fell 6.2% quarter-on-quarter, reflecting the immediate impact of consecutive RBA rate rises on borrower appetite. The number of new home loans declined 6.2 per cent to 139,794 in the March quarter 2026, suggesting that many prospective buyers have paused to reconsider their borrowing capacity.
Investor loans followed a similar pattern, falling 5.3% quarter-on-quarter. These short-term contractions indicate that both owner-occupiers and investors are taking a more cautious approach to new debt in the current environment.
However, the year-on-year figures provide important context. Total new home loans were 8.6 per cent higher than a year ago, demonstrating that despite recent softening, lending activity remains elevated compared to the same period last year. Similarly, investor loans were up 18.8% year-on-year in the March quarter 2026, with investor lending value reaching $41.5 billion in Q1 2026.
This divergence between quarterly and annual trends suggests we are witnessing a normalisation rather than a dramatic downturn.
While new lending has pulled back, refinancing activity has surged, particularly among investors. The data shows investor internal refinancing was up 30.3% year-on-year by volume in the March quarter 2026. Even more striking, investor internal refinancing was up 41.2% year-on-year by value over the same period.
These figures reflect a strategic response from borrowers who are actively seeking better terms with their existing lenders. Rather than accepting higher repayments passively, property investors are negotiating hard and, in many cases, securing improved rates through internal refinancing arrangements.
The quarterly data reinforces this momentum. Investor internal refinancing volume was up 3.3% quarter-on-quarter in the March quarter 2026, while investor internal refinancing value was up 3.6% quarter-on-quarter. This suggests that refinancing activity continued to build even as other lending categories contracted.
For many borrowers, refinancing may be one practical option for some borrowers in a rising rate environment. Switching products or renegotiating terms may reduce repayments or improve loan structure, depending on the borrower’s circumstances, loan size, fees and available rates, without the costs and complexities of selling a property or dramatically altering investment strategies.
The current environment presents both challenges and opportunities for property investors. On one hand, higher interest rates increase holding costs and reduce borrowing capacity. On the other hand, the strong year-on-year growth in investor lending suggests that committed investors continue to see value in the Australian property market.
Construction lending jumped 58% year-on-year in the March quarter 2026, indicating that some investors are pivoting toward new builds, potentially to take advantage of depreciation benefits and newer, more energy-efficient properties that may command premium rents.
The key takeaway for investors is the importance of regular loan reviews. With refinancing activity at elevated levels, lenders are competing for retention, which means borrowers who review their lending arrangements may be able to identify more suitable options or negotiate different terms.
If you hold a mortgage or investment loan in the current market, there are several practical steps worth considering.
First, review your current interest rate against what is available in the market. Many lenders offer sharper rates to new customers, but existing borrowers can often access similar pricing through internal refinancing or retention offers.
Second, consider your loan structure. Features such as offset accounts, redraw facilities, and the ability to make extra repayments can provide valuable flexibility when rates are moving.
Third, assess your overall financial position. Rising rates may warrant a review of your cash flow, rental yields, and investment strategy to ensure your portfolio remains sustainable.
The ABS data confirms what many borrowers are already experiencing: rising rates are prompting a wave of refinancing activity as Australians seek to optimise their lending arrangements. Whether you are an owner-occupier looking to reduce repayments or an investor managing a property portfolio, understanding your options is the first step toward making informed decisions.
Contact us today to discuss your lending strategy and explore whether refinancing may be suitable for your circumstances in the current market. The team at FIA is here to provide tailored guidance based on your individual circumstances and goals.
