Revealed: Banks’ active strategy to retain customers

As new data from Money.com.au reveals a significant increase in intra-homeowner refinancing, banks are taking increasingly aggressive strategies to retain customers.

According to the Australian Bureau of Statistics, internal refinancing accounts for 35% of all home loan refinancing as of March 2025, the highest share since the record began in September 2020, surpassing 30% of the four-year average.

This means that 194,898 loans are being refinancing, with the same lender having a total of 554,820 refinancing loans in the year, with the remaining 65% involving borrowers turning to new lenders.

Jacob Overs, general manager of loans at Lendy.com.au, said banks are increasingly adopting aggressive strategies to retain existing customers.

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New data shows that Australian banks are increasingly actively retaining customers.

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“Banks used to reserve the best prices for new customers, but now they are quietly offering them to existing borrowers who are threatening to leave just to prevent them from having to open and apply them in full. This could save them millions of dollars in loan books,” he said.

“Some banks, especially the Big Four, don’t even allow you to submit discharge meters online. “You have to call and ask for it, which conveniently brings you straight to their retention team – the only team that has access to rates advertised anywhere.

“Brandants now submit most refinancing applications, and under their maximum interest obligation (BID), they recommend interest rates below the borrower’s rate. So they prepare a new lender-proposal to offer a new lender transaction, but when submitting the borrower’s lender, the current lender often offers at the last minute stay rate.”

Threats to put your money elsewhere may see you get a better deal with the bank.

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Mortgage expert Debbie Hays added: “I recently had a client refinancing from one of the four major banks. Once we filed a release request, their existing lenders returned with a positive price and a $2,000 cashback offer, and nothing was advertised anywhere,” she said.

“It’s a reactive move, but more and more. What we’re seeing is that the larger loans are over $750,000.”

What can trigger a better rate on your own lender

Overs said borrowers can get higher interest rates from existing lenders even without converting their banks. These include:

Your LVR is low

If you have established a good repayment history, your loan amount as a percentage of the property’s value (called your loan value or LVR) may be lower than when you first withdraw your mortgage. As a result, you will be considered a low-risk borrower – which means you are eligible for lower interest rates on your lender. It is worth noting that if your loan amount is less than $150,000, lenders will usually reduce the motivation to retain your business.

Your intention to switch to the lender

Interest rates are falling and competition among banks is heating up. Lenders are more willing to cut deals to prevent existing customers from leaving.

Your lender may also have an internal fee level or a reserved offer without publicly advertised. These are usually triggered only when submitting the unloading form or being transferred to the retention team. This gives you access to a clearer behind-the-scenes price.

How much loan do you have with the lender

If you have multiple loans with the same lender, such as home loans and investment real estate loans, you may be in a stronger position to increase interest rates with your lender.
Lenders are more likely to offer discounts to retain borrowers with larger bundled loan portfolios.

Internal refinancing also means you can avoid paying refinancing fees on multiple loans.