With rates moving in 2026, plenty of Victorian households are looking hard at their home loan rate and wondering whether a better deal is sitting at another lender. But 2026 has added a wrinkle we haven’t seen in a few years: property values are drifting lower, and a refinance application starts with a valuation. If your home is worth less than it was when you bought or last refinanced, your equity position (and therefore your options) may have shifted without you doing anything at all.
The good news: for most borrowers, refinancing in a falling market is still very achievable, and because lenders are still competing for your business, the savings case can be as strong as ever. This guide explains how falling values flow through to your LVR, what your realistic options are at each equity level, why valuations differ between lenders, and what to do if the numbers don’t work today. It’s the same framework we use with clients across Geelong, the Bellarine Peninsula, Torquay and the Surf Coast, and with refinancers we help right across Melbourne, Ballarat, regional Victoria and Australia. If your value has fallen far enough that your loan is close to (or above) what the home is worth, our companion guide to negative equity in 2026 covers that situation in depth.
First, the market picture: verified, not vibes. PropTrack’s Home Price Index for July 2026 recorded a fourth consecutive monthly fall nationally (around −0.3% for the month), leaving national values roughly 1.8% below their March 2026 peak, while Melbourne values were about 2.7% lower over the year. Earlier, Domain data reported in July showed national house prices fell about 1.4% in the June quarter: the first quarterly decline in more than three years. Regional markets have generally held up better than the capitals, but conditions vary street by street, and Geelong and Bellarine suburbs each tell their own story. We unpacked what the RBA’s August decision to hold the cash rate at 4.35% meant for repayments in our August RBA guide.
Why does this matter for refinancing? Because every refinance application is underwritten against your loan-to-value ratio: your loan balance divided by the lender’s current valuation of your home. Your loan balance falls slowly as you make repayments, but the valuation can move quickly in either direction. When values were rising, borrowers were pleasantly surprised: the valuation had done the deleveraging for them. In 2026 the surprise can run the other way. A household that bought with a 10% deposit at the peak may find their LVR has crept up rather than down; a household that bought years ago with plenty of equity may barely notice the difference. Our LVR guide works through the calculation, and our home equity guide explains how usable equity is measured.
The change in Melbourne home values over the year to July 2026, according to PropTrack’s Home Price Index: with national values about 1.8% below their March 2026 peak after a fourth straight monthly fall. Suburb-level results differ widely, and indices are revised and updated monthly: confirm current figures for your own property with your broker before making decisions.
The refinancing conversation changes depending on where a fresh valuation lands you. The 80% LVR line matters most: below it, lenders compete hard for your loan and no LMI applies; above it, options narrow and costs rise. Here’s how we map the bands with clients, as a general guide, not a substitute for advice on your situation.
| Your LVR after revaluation | What it means | Refinancing outlook in 2026 |
|---|---|---|
| Under 60% | Strong equity buffer: the price dip barely touches your position | Full menu: sharpest pricing tiers, most lenders, room to consolidate debts or restructure |
| 60-80% | Comfortable: the standard refinancing zone | Business as usual: no LMI, wide lender choice; a conservative valuation may just trim any cash-out plans |
| 80-90% | The squeeze zone: common for 2021-2024 buyers after the 2026 dip | Switching often still possible, but LMI usually applies again: the maths needs the rate saving to outweigh the premium |
| Above 90% | Thin equity: few lenders refinance at this level | Usually better to reprice with your current lender and build equity before revisiting a switch |
| Loan exceeds value | Negative equity: refinancing to a new lender is generally off the table for now | Focus on repayments, offset savings and hardship options if needed: see our negative equity guide |
Two notes on that table. First, LMI generally does not transfer between lenders, if you paid a premium when you bought with a small deposit and you refinance above 80% LVR, you’ll usually be up for a fresh premium with the new lender, and refunds on the old one are rare outside the first year or two. That single fact sinks more falling-market refinances than any other, and it’s covered in detail in our LMI guide. Second, the bands are lender-specific: appetite at higher LVRs, and the pricing attached to each tier, differs meaningfully between banks and non-bank lenders, which is exactly where a broker comparing dozens of options earns their keep.
In a falling market, the valuation is where refinances are won and lost. Lenders use several methods (automated desktop estimates driven by recent comparable sales, kerbside checks, and full on-site valuations) and they can produce noticeably different numbers for the same property. Desktop models lean heavily on recent sales in your suburb: if the last few sales near you were soft, your estimate follows them down, even if your renovated home would outsell them all. The reverse also happens: a full valuation can come in under your expectations if the valuer is pricing caution into a declining market. Our property valuation guide explains each method and how to prepare for an on-site visit.
The practical consequence: don’t let one number decide your refinance. Because different lenders use different valuers and different models, a borrower sitting at 82% LVR with one lender can genuinely be at 78% with another. Brokers can often order or preview valuations with more than one lender before a formal application goes in: protecting your credit file from unnecessary applications while shopping the valuation, not just the rate. If a valuation looks wrong, it can sometimes be challenged with recent comparable sales, though in a soft market the stronger play is usually to test another lender’s process. Timing matters too: valuations are point-in-time, so if your suburb has held firm while headlines talk Melbourne down, the data may already support a better number than you fear.
Consider a scenario we’re seeing regularly this year. A couple in Leopold bought their four-bedroom home in 2022 with a 12% deposit and want to escape a rate that’s no longer competitive. Their own bank’s desktop valuation (dragged down by two soft recent sales in the estate) puts them just over 80% LVR, meaning a switch would trigger a fresh LMI premium that wipes out several years of rate savings. Instead of giving up, their broker tests valuations with two other lenders: one desktop model lands in the same place, but a full on-site valuation with a third lender recognises their landscaping, upgraded kitchen and larger block, landing them at 78% LVR. Same house, same market, different number, and the refinance proceeds with no LMI. The lesson isn’t that every valuation can be shopped higher; it’s that in a falling market, one valuation is an opinion, not a verdict.
Suppose the valuations all land badly and a switch would mean paying LMI again. You still have moves. The first is repricing with your current lender: existing customers frequently pay more than new ones, and a well-argued repricing request (backed by evidence of what other lenders are offering) costs nothing, requires no valuation, and can close much of the gap. Brokers routinely run this play for clients even when a full refinance isn’t viable. The second lever is structure: reviewing whether an offset account or redraw is working hard enough, whether splitting fixed and variable suits your risk appetite, or whether consolidating higher-interest debts makes sense while you wait for equity to rebuild.
The third lever is a deliberate waiting plan rather than passive waiting. Every principal repayment lowers your LVR from one side; any market stabilisation helps from the other. For a borrower at 83% LVR, the path back to a clean sub-80% refinance is often measured in months, not years: especially if they park extra savings in an offset or make modest additional repayments in the meantime. We map this out with clients as a dated plan: what the loan balance will be in six and twelve months, what valuation would be needed to clear 80%, and which triggers (an RBA move, a strong local sale, a lender promotion) should prompt a fresh look. That way the refinance happens at the first moment it genuinely pays, not the first moment it’s possible. Our refinancing guide covers the full switching checklist for when that moment arrives.
Falling-market refinancing is intensely local. Across Greater Geelong, entry-level suburbs like Corio, Lara and Armstrong Creek have been comparatively supported by first-home-buyer demand under the low-deposit schemes, which helps valuations hold; some premium coastal pockets on the Bellarine and Surf Coast (Torquay, Ocean Grove, Barwon Heads) have seen longer campaigns and price revisions, which valuers notice. Melbourne’s west, including Werribee and Laverton, sits inside the capital-city index that has fallen furthest over the year, while Ballarat and much of regional Victoria have generally been steadier. The point isn’t to guess your suburb’s number from a headline: it’s that the index your headline quotes may not be the market your valuer sees, in either direction. A broker who works these postcodes daily can usually tell you before an application whether a valuation is likely to help or hurt.
And it’s worth keeping the prize in view: with rates moving, the gap between a sharp new-customer rate and a tired old one is still real money every month, and lenders are competing hard for well-secured refinancers precisely because new purchase lending has slowed. If your LVR is comfortably under 80%, 2026’s falling prices are mostly noise for your refinance: the savings case stands on its own. A quick refinance assessment will tell you which side of the line you’re on, and if you’re weighing a bigger move rather than a switch, our new guide to upsizing in a falling market looks at the other side of the same coin. Local borrowers can also start with our Bellarine broker page.
Before you apply anywhere, work out your own conservative LVR: take your current loan balance, then divide it by a cautious estimate of your home’s value: recent sales of comparable homes in your street, not your council rates notice or a 2024 appraisal. If that number is under 78%, you likely have room to refinance cleanly even if a valuation comes in a touch soft. If it’s hovering between 78% and 85%, don’t lodge an application blind: ask your broker to test valuations across lenders first. Every formal application sits on your credit file, and in a falling market the order you do things in (valuation first, application second) is the difference between a clean switch and a knock-back that follows you around.
In most cases, yes. What matters is your loan-to-value ratio after a current valuation: not the fact that prices have fallen. If your LVR remains under 80%, refinancing generally proceeds as normal with a wide choice of lenders and no LMI. If the fall has pushed you above 80%, switching may still be possible but usually attracts an LMI premium, so the savings need to outweigh that cost. Because valuations differ between lenders, it’s worth testing more than one before lodging a formal application.
Between 80% and 90% LVR, many lenders will still refinance you, but lenders mortgage insurance usually applies and pricing tiers are less sharp. Above 90%, few lenders have appetite and the economics rarely work. Alternatives include asking your current lender to reprice your rate (no valuation needed), restructuring your loan, or building a short, deliberate plan (extra repayments plus offset savings) to bring your LVR back under 80% before switching. A broker can model which path saves the most over a realistic timeframe.
If your new loan is above 80% of the new lender’s valuation, generally yes. LMI protects the lender, not you, and a policy paid with your original loan does not transfer to a new lender; partial refunds are uncommon and usually limited to loans closed within the first year or two. That’s why a falling valuation can quietly turn a money-saving switch into a money-losing one, and why checking your realistic LVR, and each lender’s valuation, should come before any application.
Not automatically. If your LVR is comfortably under 80% today, waiting just means paying your current rate for longer: the falling market doesn’t affect your switch. If you’re marginally above 80%, a structured wait can make sense, but make it active: extra repayments and offset savings lower your LVR from one side while any market stabilisation helps from the other, and repricing with your current lender can cut your rate in the meantime. Nobody can reliably time the bottom of the market, so anchor the decision to your own numbers rather than price forecasts.
We’ll run a no-obligation refinance assessment with current local data: a realistic view of your property’s value, your true LVR, which lenders’ valuations are likely to treat you best, and whether switching, repricing or a short waiting plan saves you the most. Serving Geelong, the Bellarine Peninsula, Torquay, the Surf Coast, Melbourne, Ballarat and borrowers Australia-wide.
With years of experience in mortgage broking and finance, Melanie helps first home buyers, refinancers, investors and business owners across Geelong, the Bellarine, the Surf Coast, Melbourne and regional Victoria make their money work harder. Contact our team on 03 9020 2699.
