Is a Lower Interest Rate Always the Right Reason to Switch Lenders, or Are There Other Things to Weigh Up?
A 0.2% rate saving on a loan without an offset account can cost you more than it saves — if you consistently hold $40,000+ in your transaction account. The features are part of the rate calculation, not a separate consideration.
Rate is the most visible reason to switch — but it’s not always the most important one. Some borrowers achieve a better financial outcome by staying on a marginally higher rate with features that suit their behaviour than by chasing a lower rate on a product that doesn’t match how they actually use the loan.
When Features Matter More Than Rate
An offset account reduces your daily loan balance for interest calculation purposes. Every dollar in the offset reduces the balance used to calculate interest. For example, holding $30,000 in an offset on a $500,000 loan at 6.5% could reduce interest by around $1,950 per year. A loan at 6.3% without an offset on the same balance may result in less overall interest benefit depending on how the offset is used.
Other Reasons Borrowers Switch That Aren’t About Rate
- Accessing equity — current lender won’t release it or the structure is inefficient
- Loan structure changes — needing to split, consolidate, or change repayment type
- Fixed rate expiry — the revert rate is uncompetitive
- Investment restructure — separating or cleaning up loans ahead of a property transaction
The Right Question to Ask
Not: ‘Is this rate lower?’ But: ‘Over the next 3–5 years, does this loan produce a lower total cost for my specific situation than staying where I am?’
You may wish to speak with a licensed mortgage broker to assess your personal circumstances.
This is general information only. Refinancing decisions depend on individual circumstances. Speak with a licensed mortgage broker for advice tailored to your situation. All loans are subject to lender approval.
Sources: ASIC MoneySmart, Comparison Rates 2025; National Consumer Credit Protection Act 2009; MFAA Industry Intelligence Service Report 2025.
