For most of the past few years, refinancers could count on one thing: their home was worth more than when they bought. In 2026 that's changed in several markets. Cotality reported national values had fallen for six straight months to September, with Sydney down 7.0% over the year and Melbourne down 6.2%.
If you're thinking about refinancing, here's how falling values affect you.
Why the valuation matters so much
When you refinance, the new lender values your property. That valuation determines your loan-to-value ratio (LVR), and LVR affects:
- Whether you pay LMI. Above 80%, most lenders charge it.
- Your interest rate. Many lenders price in tiers, with better rates below 70% or 60% LVR.
- How much equity you can release if you want cash out.
A lower valuation can push you into a worse pricing tier or above the LMI threshold.
An example
Last year, Chloe's apartment was worth an estimated $850,000 and she owed $660,000 (78% LVR). She planned to refinance this year.
The new valuation comes in at $800,000. Her LVR is now 82.5%. Refinancing would mean paying LMI, which could easily outweigh the rate saving.
What you can do
Get a realistic estimate first
Online estimates are a starting point, but they lag in a falling market. Look at recent sold prices for similar properties nearby. A broker can also run indicative valuations before you formally apply, without a credit enquiry.
Try a different lender's valuer
Different lenders use different valuation firms and methods. It's not unusual for valuations to differ by a few per cent. A broker can order a valuation through another lender if the first is low.
Challenge a low valuation with evidence
If the valuer missed recent comparable sales or features of your home, a broker can request a review with supporting evidence. It doesn't always work, but sometimes it does.
Reduce your loan first
If you're just above a threshold, using savings or offset funds to pay the loan down before refinancing can bring you under 80% or into a better tier.
Negotiate instead
Your current lender doesn't need to revalue your property to cut your rate. If refinancing would mean LMI, ask your lender to match a competing offer. Read how to negotiate a lower home loan rate.
What about cash-out refinances?
If you were planning to release equity for a renovation or investment, falling values reduce what's available. Don't sign a building contract or commit to a purchase until the valuation and approval are confirmed.
Not every market is falling
Perth was up 10.1% over the year to September 2026 and regional areas up 5.6%, according to Cotality. If you own in these areas, your LVR may have improved, so it could be a good time to seek a better rate tier.
The bigger picture
Falling values don't change what you owe. If you plan to stay in your home for many years, a dip matters most when you want to borrow against it or sell. Focus on what you can control: your rate, your repayments and your buffer.
Frequently asked questions
Does a lower valuation affect my current loan?
No. Your existing lender won't revalue or change your loan unless you apply for something new.
Can I see the valuation report?
Lenders don't always provide the full report, but your broker can usually tell you the value and sometimes the comparable sales used.
Should I wait for values to recover before refinancing?
If you're above 80% LVR and LMI would cost more than you'd save, waiting or negotiating may be better. If you're comfortably below 80%, falling values may make little difference.
Worried about your valuation? Call Finfident on 0424 545 654. We'll check where your LVR is likely to land before you apply anywhere.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.