Rethinking refinancing for investors amid shifting rates

As the rate tide turns, property investors face strategic refinancing choices that could reshape portfolios, while brokers adapt their approaches to a changing economic landscape

IMAGINE BEING asked to pick the right door in a game where the rules keep changing – and sometimes, even when you pick the same door twice, different things happen. That’s what it feels like for many property investors right now. They’re weighing refinancing decisions not against certainty but against factors that can seemingly turn on a dime. With economists and banks regularly revising their interest rate forecasts, investors face a choice: refinance now based on current rates or hold out for deeper cuts that may – or may not - materialise. Year-on-year comparisons reveal a jump in refinancing by investors, but this may mean less than it appears, given that refinancing levels a year ago were at multiyear lows. The Reserve Bank of Australia’s latest rate cut in May to 3.85% and its

This stability extends beyond just application volumes to the operational aspects of securing refinancing for investment properties. It provides a stable foundation for investors to make strategic decisions, even as they contemplate how potential rate cuts might influence their long-term approach. Investors who feel the situation is difficult to read should seek expert advice in times like these. CommBank’s general manager for third party Baber Zaka says, “A changing rate environment provides opportunities for all homeowners, including property investors, to not only review their current situation and ensure they are in the right product for their needs, but take stock of their evolving financial situation and look at whether the timing is right to take the next step in their property plans.” Kristy Clucas from ME Bank has observed a similar pattern, particularly among investors eyeing new opportunities. As head of broker strategy, partnerships and performance at BOQ Group, which includes the ME brand, she says, “ME Bank loan data tells us that in recent years property investors have primarily been motivated by the opportunity to tap their equity to acquire new investments. This trend has been particularly noticeable across the capital cities of Australia’s east and west coasts – Sydney, Melbourne, Brisbane and Perth.” She also anticipates more investors re-entering the refinance market as rate cuts improve serviceability. “A trend we expect to see over the remainder of 2025 is the freeing up of investors that were previously not in position to refinance because of serviceability, especially if lower interest rates arrive as anticipated.” A sentiment survey conducted by the MFAA in March showed that 42% of broker clients were finding it harder to refinance compared to 12 months prior, when 83% had found it tougher. This sentiment has steadily improved as rates have stabilised and expectations for cuts have grown – but what lies ahead?

“Investors should be doing their research now to find the most competitive fixed and variable rates,” Clucas says. “Recognising what our customers value, ME Bank recently reduced its fixed rate outside of the RBA’s cycle, delivering an immediate reduction in payments rather than waiting for uncertain timing of variable rate cuts.” She adds that structuring for flexibility is key: “Split loans – a combination of a competitive fixed rate and variable rate loan – are an option that provides investors with a level of certainty for cash flow management and allows for more flexibility to make changes if circumstances change.”

Sep-Dec 2024

Slight drop in value of investors’ refinanced loan commitments

A central question facing investors considering refinancing is whether to act now or wait. The anticipation of rate cuts has created a strategic dilemma for many property investors who are weighing immediate needs against potential future savings. “With regard to the timing and downward rate movements, we need to be careful to understand the clients’ needs and wants rather than trying to predict rate cycles and recommending products on these assumptions,” says Buchanan. “Brokers are bound by BID [the best interests duty], which means they need to adequately educate their clients about all available solutions and the pros and cons of each.”

This emphasis on comprehensive client guidance rather than market timing represents a maturation in how refinancing decisions are approached. The focus on BID highlights the importance of tailored advice that considers each investor's specific circumstances beyond merely chasing the lowest rate. “Regardless of what happens in the property market, there is never a bad time for property investors to be looking at and considering their property options and long-term strategy,” says Zaka. Clucas agrees that strategic thinking matters more than timing alone. ME Bank didn’t wait for the central bank when making a recent rate decision, unlike many banks that moved en masse to pass on the benefit to customers after the May announcement.

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“This is where brokers play such a pivotal role,” says Zaka. “They have the market knowledge and lending expertise to be able to provide their customers – specifically property investors – with insightful information that will help them to achieve their short- and long-term property ambitions.” Financial institutions have responded to this changing dynamic by developing support systems that enable brokers to provide more comprehensive guidance throughout the client relationship life cycle. “Most recently, we launched our CommBank Refinance Optimiser Series – a number of short videos covering the frequently asked questions customers may have when it comes to refinancing,” Zaka

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“A trend we expect to see over the remainder of 2025 is the freeing up of investors that were previously not in position to refinance because of serviceability”

Kristy Clucas, ME Bank

Miniature people: business man standing with stack of coins, lap top, bar graph on blurred city scape and copy space using as background business money investment plan, real estate, property.

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Broker observations suggest the investor refinancing market has been flat in recent months. Government data for the March quarter shows investor refinancing activity actually fell compared with the previous quarter, though only marginally. True, year-on-year comparisons are brighter – but think back 12 months. Remember ‘Survive till ’25’? Rates were at their highest, and everyone knew they would be there for a while, making even modest activity now look good. “It’s business as usual,” says Blake Buchanan, general manager at Specialist Finance Group. “There is a slight uptick with purchasers' interest in using buyer’s agency services, but otherwise nothing to speak of.”

explains. “These videos were designed for our brokers to share with their customers, providing them with information that is relevant to their current financial needs.” Clucas highlights how ME Bank’s system updates are designed to support this role. “Since 2022, Bank of Queensland [BOQ] Group has been on a digital transformation journey to deliver operating efficiencies, flexibility for future growth, and enhanced customer experience. As part of the technology transformation, ME Bank is rolling out a new home loan platform that aims to simplify the entire application journey, benefiting both brokers and customers plus supporting segments like investors and the self-employed.” She adds that broker benefits will include faster automation, real-time updates and simplified products, while customers will experience smoother onboarding and gain access to digital tools for better loan management.

“I don’t think that there are huge opportunities in the investor space coming in the next 12 months or so … the attractiveness of properties as an investment isn’t quite as strong as it once was”

Blake Buchanan,Specialist Finance Group

more dovish forecasts and commentary illustrate the uncertainty factor in the system at the moment. Some banks had predicted the possibility of a mega 50 basis points cut this round to shore up business and consumer morale, when at the start of 2025 this would have seemed far-fetched. Few would be surprised if the narrative on where rates are headed were to continue to flip-flop should the inflationary environment and geopolitical situation warrant it. John Maynard Keynes, the British economist, is often quoted as saying “when the facts change, I change my mind”, but lately, economists seem to be using this as a get-out-jail-free card. Investors don’t have that luxury when they decide whether to act on current refinancing opportunities or bet on more rate cuts ahead.

Industry experts

Stewart Saunders

Heritage Bank

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

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Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

Heritage Bank

Stewart Saunders

Heritage Bank

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

Heritage Bank

Stewart Saunders

Business as usual – with nuances

Blake Buchanan

Specialist Finance Group

Kristy Clucas

ME Bank

Baber Zaka

CommBank

Baber Zaka is general manager of third party banking at Commonwealth Bank, where he leads broker partnerships with a focus on transparency, collaboration and delivering value. With over a decade at CommBank, he has held senior leadership roles across distribution strategy and operations. Zaka brings a strong background in financial analysis, strategic planning and deal management, honed through his experience at NBN Co, Virgin Money, RBC and KPMG. He holds a Bachelor of Science in Economics and Philosophy from the London School of Economics. Known for his broker-first mindset, Zaka champions innovation and trust within the lending ecosystem.

CommBank

Baber Zaka

Kristy Clucas is the head of broker strategy, partnerships and performance at BOQ Group, which includes the ME Bank brand. With over two decades of experience in financial services, Clucas plays a pivotal role in driving residential mortgage growth through the broker channel, helping to shape and execute the group’s strategic vision. Clucas is widely respected for her ability to foster genuine, personalised relationships with stakeholders – a hallmark of her leadership style. Calm, composed and deeply committed, she exemplifies resilience and determination in a way that inspires trust and respect. Her thoughtful approach and people-first mindset have made her a valued leader and role model across the business.

ME Bank

Kristy Clucas

Blake Buchanan, general manager at Specialist Finance Group (SFG), is an expert in the broker channel with some 20 years’ experience in the finance industry, specialising in broking, lending and aggregation. Buchanan is known for his expertise and passion for the broker channel, along with his ability to deliver strong distribution results through systems, people, processes and partnerships.

Specialist Finance Group

Blake Buchanan

Strategic timing versus client needs

Published 09 June 2025

“A changing rate environment provides opportunities for all homeowners, including property investors, to review their current situation”

Baber Zaka, CommBank

$12.0bn

7.7%

20.0%

$21.3bn

9.1%

23.3%

Quarter

Investor internal refinancing

Change vs previous quarter

Change vs same quarter in prior year

Investor external refinancing

Change vs previous quarter

Change vs same quarter in prior year

Jan-Mar 2025

$7.7bn

-0.5%

28.7%

$21.0bn

-1.6%

22.6%

Source: ABS Lending Indicators

Source: MFAA February 2025 Member Sentiment Survey (conducted March 2025)

Feb 2024

Are borrowers finding it easier to refinance?

Proportion of broker clients finding it more difficult to refinance

Feb 2025

83%

42%

The relationship between brokers and property investors has evolved significantly, with post-settlement engagement becoming increasingly important for both portfolio optimisation and client retention. “Those who have a process for client care post-settlement perform better when it comes to client retention and outcomes,” says Buchanan. “If your process is to simply ‘check in’ with the client periodically, whilst this may be helpful, there is a better way to approach client care to maximise your retention rates and assist your clients.” This evolution towards ongoing advisory relationships reflects how investor needs have grown more complex, requiring continual refinement of financing structures, rather than periodic transactions. Sophisticated brokers now position themselves as portfolio partners rather than just transaction facilitators.

Broker value in client care

we need to solve this (politicians) have no answers or the gumption to make the changes required,” says Buchanan. Addressing these structural challenges requires investors to take a more active approach to portfolio management, with refinancing decisions representing important strategic adjustments rather than routine maintenance.

Market fundamentals challenge traditional models

Beyond cyclical rate movements, structural shifts in property investment fundamentals are influencing refinancing decisions in ways that require more sophisticated analysis than in previous cycles. “I don't think that there are huge opportunities in the investor space coming in the next 12 months or so,” says Buchanan. “If anything, the attractiveness of properties as an investment isn't quite as strong as it once was. If we compare yields alone for an average suburb of, say, Normanhurst in Sydney, the yield has fallen by around 20% in the past five years and to probably less than half of what it was 10 years ago.” This compression in rental yields relative to property values creates a more challenging equation for investors evaluating refinancing options, particularly those considering drawing equity for additional purchases. The fundamentals now demand more careful cash flow analysis than during periods when yield trends were more favourable. “Property decisions should be made in line with an investor's unique financial situation and personal goals,” says Zaka. “Before taking the next step in their property investment journey, there are numerous things investors should consider, including rental yields, vacancy rates and the costs associated with property investment.”

Clucas notes that house prices may rise if rate cuts stimulate demand. “Rate cuts that increase borrowing capacity for all borrowers could potentially push property prices up in an environment where demand has been relatively consistent and supply constrained,” she says. “Acting sooner to make purchases may mean an investor gets in before property prices increase.” Others feel that deterioration in traditional investment metrics has prompted many investors to reconsider their portfolio structures, with refinancing becoming a tool for optimisation rather than merely expansion. This shift in perspective represents a maturation of the investor market. “We have a big problem with property at the moment, and the people

Financial institutions continue to refine their approach to investor refinancing, recognising both the challenges and opportunities presented by the current market phase. “At CommBank, we are constantly updating our home loan policies to better serve our customers, while maintaining prudent lending standards,” says Zaka. “We are also always seeking opportunities to improve and advance our third-party service offerings in response to feedback from our brokers.” Clucas says the same applies to ME Bank, particularly when it comes to helping brokers access capital for their investor clients. “The increase in property values means more equity for investors to tap into for new investments,” she says. But investors invest for different reasons, and one person’s endgame might not be another’s. Zaka says, “It's important for property investors to consider exactly what they are looking to achieve from their investment, as this will help determine their strategy and make a decision about the best way to gear their property so that it suits their financial needs and goals.” This emphasis on specialist knowledge underscores how refinancing decisions have grown more complex, requiring expertise that extends beyond product comparison to encompass taxation implications, portfolio structure and long-term wealth creation strategies. “Brokers within our group know the investor lending space, and if they don't, they shouldn't be brokers,” says Buchanan. “This should apply to the entire industry.” As rate cuts take effect, but future moves continue to be uncertain, investors who approach refinancing with strategic clarity rather than tactical opportunism will likely achieve superior outcomes. The market has evolved beyond simple rate chasing to a more sophisticated understanding of how financing structures can enhance overall portfolio performance through careful decisions that align with individual investor circumstances over the longer term.

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