Refinancing Hurdles Double: What Trapped Borrowers Can Do
New MFAA survey data shows nearly half of brokers reporting clients blocked from refinancing due to serviceability rules.
Nearly half of Australia's mortgage brokers are now reporting that more of their clients cannot switch loans due to serviceability requirements. That figure — 49.2 per cent of 588 brokers surveyed — is nearly double the 24.4 per cent who said the same thing just six months ago.
MPA Australia reports those figures from the Mortgage & Finance Association of Australia's (MFAA) August 2026 Market Sentiment Survey, and they represent the sharpest single-period deterioration the survey has ever recorded.
The picture has been worse before. The proportion of brokers flagging refinancing difficulty had fallen from 83 per cent in February 2024 to 42 per cent by February 2025, with conditions easing further through August 2025. That two-year improvement has now reversed — and reversed sharply.
Why the serviceability buffer is back in focus
The central mechanism, as MPA Australia reports, is the 3-percentage-point serviceability buffer that the Australian Prudential Regulation Authority (APRA) requires lenders to apply. When a bank assesses a borrower's capacity to repay, it must calculate repayments at a rate three percentage points above the loan's actual rate.
In a rising-rate environment, that buffer compounds. As rates increase, the assessment rate rises in step. For borrowers who originally qualified at lower rates and whose income has not kept pace with rate rises and cost-of-living increases, the arithmetic can prevent them from accessing a cheaper loan — even when they have a perfect repayment history on their existing one.
MFAA chief executive Anja Pannek has called out the gap clearly: "Borrowers who have consistently met their repayments should not be unnecessarily prevented from moving to a more affordable or suitable home loan."
The MFAA has been pressing APRA for greater flexibility in how the buffer is applied — particularly for borrowers with a strong repayment record who are seeking to refinance rather than take on additional debt. As Pannek noted: "The findings reinforce the importance of lenders having appropriate exceptions processes that consider a borrower's individual circumstances and demonstrated repayment history."
That advocacy has taken on new urgency given the current data.
What brokers are actually doing for blocked clients
Despite the worsening picture, the survey results show that brokers are not walking away from clients who cannot refinance — they are finding other routes.
MPA Australia reports that in the six months to August 2026:
- 96 per cent of brokers helped clients secure a discount from their existing lender - 95 per cent facilitated a refinance to a new lender - 91 per cent helped clients restructure their home loan - 89 per cent helped first-time mortgage broker clients refinance their loans
Those numbers point to something borrowers often overlook: a "no" on the conventional refinancing pathway is not the end of the conversation. An experienced broker has several tools available before conceding the situation is stuck.
Pannek described the approach: "The value of a broker is being able to look at the whole picture and find an appropriate option for that individual client. Sometimes that's refinancing and sometimes it's getting a better outcome without moving lenders at all."
That "better outcome without moving lenders" option — negotiating a rate discount with the existing lender, restructuring loan terms, or switching products within the same institution — is often more accessible than borrowers realise, and in the current environment it may be the fastest path to relief.
What to do if you feel stuck
Borrower confidence has deteriorated significantly. The MFAA data shows 55.3 per cent of brokers reporting clients feeling negative about their financial outlook, compared with 24.2 per cent in the prior survey. Cost-of-living pressure is the chief driver, and 40 per cent of brokers expect more clients to struggle with repayments over the next six months.
The MFAA's message for borrowers in this position is consistent: start the conversation before you are struggling.
"Don't wait until you're struggling," Pannek said. "An early conversation gives everyone more options."
A borrower who approaches a broker while still meeting repayments has access to a wider range of solutions than one who waits until they fall behind. That gap widens further in a rising-rate environment.
If you are making your repayments but feel squeezed, or if you suspect your current rate is above market but are unsure whether you can switch, use our refinance savings calculator to understand the potential upside. Then compare refinance options to see what the competitive end of the market looks like.
The record 81.6 per cent of new home loans now written through brokers reflects a straightforward reality: in a complex market, borrowers consistently find value in professional advice. The MFAA has confirmed it will use the survey findings to inform ongoing discussions with lenders, regulators and government on serviceability settings and competition in the market. If you have not spoken to a broker lately, that conversation is worth having now.