Refinancing Hit a Record 57% of LMG’s Lodgements While New Lending Value Sat 24% Below January. RG 273.119 Says the Stay-Put File Is Still a Recommendation

1. What LMG’s numbers actually say

Loan Market Group’s October 2026 market report, reported on 21 October by Australian Broker, Mortgage Professional Australia and The Adviser, put refinancing at a record 57% of the aggregator’s mortgage lodgements in the final two weeks of September. The Adviser reported the same record as refinancing accounting for more than half of total lodgements across the month.

That headline is easy to misread as a recovery. The same report says it isn’t. Stripping out refinancing and seasonally adjusting, the value of new mortgage lodgements sat 24% below where it was at the end of January 2026. Total lodgements including refinancing were up 10% in September from their July low — an improvement, but LMG was blunt about what it does and does not mean: “Sentiment in the housing market remains low, and there has been no recovery in underlying mortgage activity.”

A share is a fraction. When the denominator contracts, the share of whatever is left standing rises without a single extra client walking through the door. Refinancing is at a record proportion of LMG’s book in part because purchase activity fell away around it.

The purchase side shows where it went. Investor lodgements were down 45% since the end of January and 23% since the end of June. Within that, investor demand for established homes was down 56% against 10% for new homes — a split that sits alongside the May 2026 federal budget change reported with the data, under which purchases of existing homes made after the budget lose negative gearing while new homes keep it. Owner-occupier upgraders were down 16% and first home buyers down 13% against end-January, with LMG describing both as having since steadied.

Geographically, the decline in new lodgements since end-January ran Queensland 30%, New South Wales 29%, South Australia 26%, Victoria 20%, and Western Australia and the rest of the country 11% each. LMG notes the smaller states are not seasonally adjusted because the samples are smaller — worth remembering before you read too much into a single state’s position in that table.

Loan Market chief financial officer Cherie Bell framed the shift as client-led, saying refinancing is “currently responsible for more than half of total loan lodgements” because “savvy consumers are exploring ways to save money on their largest household debt” — and adding, pointedly, that “it isn’t just about looking for the lowest interest rate.” LMG’s report describes the same effect as “an increase in mortgage churn, with brokers helping customers find better mortgage deals.”

2. The second number that changes the meaning

Refinancing dominating lodgements would be straightforwardly good news if refinances completed at normal rates. They increasingly don’t.

The MFAA’s August 2026 Market Sentiment Survey, published by the association on 23 September and drawn from 588 broker respondents, found 49.2% of brokers reported more clients struggling to refinance because they do not meet serviceability requirements. Six months earlier that figure was 24.4%. It has more than doubled. For context on how this measure moves, the MFAA recorded 83% in February 2024 and 42% in February 2025 — so the current reading is a sharp reversal of a two-year improvement, not a new peak.

The same survey found 55.3% of brokers describing their clients as feeling negative about their finances, up from 24.2% six months earlier, with 37.9% neutral and 6.8% positive. Cost of living was the main driver, followed by federal budget tax settings and interest rates. Looking forward, 40.7% expected more clients to struggle to meet home loan repayments over the following six months.

The backdrop is a tightening cycle that is still running. The RBA raised the cash rate to 4.60% effective 30 September 2026, its fourth increase of the year and 100 basis points in total, after moves in February, March and May and holds in June and August. Every one of those increases lifted assessment rates on clients who were qualified under a lower one.

Put the two datasets side by side and the picture resolves. Refinancing is the largest single source of broker activity in LMG’s mix, and it is also the activity nearly half of surveyed brokers report running into a serviceability wall. The growth category and the dead-end category are the same category.

3. What ASIC’s guidance says about staying put

This is where a volume story becomes a compliance story, and it rests on a paragraph that gets far less airtime than it deserves.

ASIC’s Regulatory Guide 273, Mortgage brokers: Best interests duty, published in June 2020, addresses the recommendation to do nothing. RG 273.119 states that you “must not suggest that a consumer remain in a credit contract without considering” whether that is in the consumer’s best interests, and quotes the Replacement Explanatory Memorandum to the effect that “it may be a breach of the duty if the broker suggested the consumer remain in their current home loan.” RG 273.120 adds that “for consumers who may be thinking about refinancing, you should consider the costs associated with refinancing.”

The guidance cuts both ways, which is the part worth sitting with. RG 273.58 says that for consumers thinking about refinancing, “the expenses incurred when refinancing may exceed the cost savings of a new loan,” and that “in this situation, recommending a new loan may not be in the consumer’s best interests” — while also noting the consumer “may benefit from being made aware of any potentially minor cost savings associated with refinancing.” RG 273’s own worked example on a loan health check contemplates a broker determining “that there is no benefit in terms of costs (or other features) in changing,” and says the broker “would need to be satisfied that suggesting that Annie remain in her current loan would be in her best interests.”

So staying put can be the right answer. It is simply not a non-answer. Under the guidance it is a recommendation that has to be reasoned, and ASIC’s stated expectations on records don’t carve it out: RG 273.15(d) says “the reasons for this conclusion should be recorded and explained to the consumer,” RG 273.160 says “you should keep records of your reasoning behind any recommendation you make,” and RG 273.104(b) looks for records that “clearly record the recommendations you presented, including any alternatives that are not selected by the consumer.” RG 273.163 sets the standard those records are measured against: “We expect that these records will clearly show how you have complied with the best interests obligations.”

4. The file that doesn’t document itself

Here is the structural problem. Nearly every compliance habit in the broker channel is attached to a transaction. You collect documents because a lender wants them. Your CRM prompts you because an application exists. Your aggregator’s file review samples lodgements. Your audit trail is, in practice, a by-product of lodging.

A client who enquires about refinancing, gets assessed, and stays where they are generates none of that. There is no application number, no lender decision, no aggregator file to be sampled, no commission event. The work happened — often several hours of it, including a servicing assessment across multiple lenders — and the only trace it leaves is whatever you deliberately chose to write down.

That was a rounding error when these conversations were a small tail on a purchase-led book. On LMG’s numbers, refinancing is now the majority of lodgement activity, and on the MFAA’s numbers roughly half of brokers are seeing more of those conversations blocked. The undocumented category is no longer the tail. It is plausibly the largest body of credit assistance in a modern broker book that leaves no systemic record.

5. Retention offers and the 1% buffer

Two live market features make these files harder than they look.

The incumbent moves the goalposts mid-conversation

Australian Broker reported on 20 October that existing lenders’ retention teams are offering larger discounts and waived fees, and that brokers are consequently sometimes advising clients to stay and make extra repayments instead. The MFAA survey points the same way: in the six months to August 2026, 96% of brokers had helped a client secure a lender discount, 95% had helped a client refinance with a new lender, and 91% had helped restructure an existing loan.

A retention offer arriving after you have done the comparison does not just change the answer — it changes which answer your file has to justify. RG 273.63 notes that “any promotional offer that is quantifiable will be considered as part of the cost of the credit product,” and RG 273.56 warns that “the product with the lowest interest rate is not necessarily the lowest cost option for all consumers.” A discount extracted from the incumbent is a quantifiable outcome you produced. If it isn’t on the file, you did the work and kept none of the credit.

The 1% buffer is a policy lever with edges

The same Australian Broker report covers the serviceability buffer pathway some lenders apply to like-for-like refinances — testing at 1% over the rate rather than the standard 3% — with Atelier Wealth managing director Aaron Christie-David saying: “We have been using the 1% refinance buffer, which is such a fantastic policy.” The report notes these options began appearing in 2023, and that at least one major’s pathway excludes debt consolidation.

That exclusion is the point for file purposes. “Like-for-like” is a policy definition, not a description of your client’s intentions. The moment a client wants to roll in a car loan or take a small cash-out, the reduced buffer may fall away, and the scenario you quoted stops being available. Which lender’s version you used, and whether the client’s actual structure qualified, is the kind of detail worth recording while you remember it — RG 273.73(g) directs attention to “the extent to which switching to the new credit contract will be in the consumer’s best interests,” and that assessment depends on which policy you were actually working under.

It’s Simple Finance founder and chief executive Joseph Daoud put the client-side stakes to Australian Broker plainly: “The worst position isn’t a high rate, it’s a high rate you can’t leave.”

6. The commercial read

Strip the compliance layer away and the business problem is still there.

• Activity and revenue have decoupled. LMG’s total lodgements rose 10% off the July low while new lending value sat 24% below January. A busier week is no longer evidence of a better month.
• Your average file is doing less work for you. A refinance that completes typically moves an existing balance rather than writing new money, and The Adviser’s report of the LMG data put total lodgement value down 19.3% year on year in the final September fortnight, with application numbers down 23.6%.
• The investor segment that carried diversified books has gone quiet. Down 45% since January, and down 56% for established homes. If investor files were your margin, that margin is structural, not seasonal — the budget change that drove it is still in place.
• Retention work is unpaid unless you make it visible. Negotiating a discount with an incumbent generates no commission event. It does generate a client who stays in your database. Whether that converts into trail, a review cycle and referrals depends entirely on whether you logged it as a piece of work you performed.

There is one genuinely encouraging number in the MFAA data worth holding onto: 93% of brokers reported having returning clients, against a broker share of new residential home lending the MFAA put at 81.6%. The channel’s hold on the client relationship is not in question. What is in question is whether a book built on refinancing and retention is being recorded in a way that survives both an audit and a rate cycle.

7. A stay-put file framework

If roughly half of your refinance conversations are now ending without a lodgement, those conversations need a process of their own rather than an informal note. A workable shape — to take to your licensee and adapt, not to adopt from an article:

1. Record the ask in the client’s words. “Wants a lower rate” and “wants lower repayments while on reduced hours” lead to different recommendations and different evidence. RG 273.90 expects the recommendation to be explained “relative to the other options available” — which presumes you captured what the client was trying to achieve.
2. Capture the options you actually tested, including the rejected ones. Lender, product, rate, fees, and the assessment outcome. RG 273.104(b) looks for records that include “any alternatives that are not selected by the consumer.” An options table with three lines and a date is a file; a recollection is not.
3. Write down why staying wins, in cost terms. Switching costs versus savings, per RG 273.58 and RG 273.120. Name the discharge fee, the application and valuation costs, any break cost, and the monthly difference — then the payback period. This is the single sentence a future reviewer will look for.
4. Separate “shouldn’t move” from “can’t move”. These are different files. If serviceability was the blocker, record which assessment, at which buffer, and what would change the outcome — a repaid card, a completed probation, a return to full hours.
5. Log what you extracted from the incumbent. The discount, the fee waiver, the structure change, the date it took effect, and the dollar impact. It is your work product and it belongs on the file.
6. Set a dated trigger, not a vague intention. “Review after the 3 November RBA decision” or “re-test in March when probation ends”. A recommendation to stay is explicitly conditional on circumstances you have written down; the review date is what makes that honest.

What to review this week

• Pull every refinance enquiry from the last 90 days that did not become an application. Count them. That number is your undocumented exposure.
• Pick five at random and ask whether the file shows what you compared and why the client stayed. If it doesn’t, the gap is a process gap, not a memory gap.
• Confirm with your aggregator whether any of your non-lodging credit assistance is captured anywhere in their system. Do not assume.
• Re-check which lenders on your panel apply a reduced refinance buffer, and exactly what disqualifies a file — debt consolidation and cash-out are the usual carve-outs.
• Flag clients you qualified before February 2026. They were assessed under a materially lower cash rate.

8. What to watch next

The RBA’s next decision lands on 3 November, with the Statement on Monetary Policy released the same afternoon. A fifth increase would push more of your back book into the group the MFAA is already measuring — clients who want to move and can’t — and would widen the gap between the rate a client holds and the rate they can qualify for. A hold does the opposite only slowly.

Either way, the structural point stands. The composition of broker work has shifted toward conversations that may not produce a transaction, and the industry’s record-keeping reflexes are still wired to transactions.

Sources read for this article: Loan Market Group October 2026 market report as reported by Australian Broker (21 October 2026), Mortgage Professional Australia (21 October 2026) and The Adviser (21 October 2026); Australian Broker, “Refinance trap: brokers say serviceability is locking borrowers in” (20 October 2026); MFAA, “Refinancing barriers rise as brokers help borrowers find savings” (23 September 2026), reporting its August 2026 Market Sentiment Survey of 588 brokers; ASIC Regulatory Guide 273, Mortgage brokers: Best interests duty (June 2020); ASIC Report 840 (13 October 2026); Reserve Bank of Australia cash rate target data and monetary policy release schedule. Year-on-year lodgement value and application figures are as reported by The Adviser from the LMG data.