Why ‘set and forget’ home loans can quietly cost borrowers thousands

03 FEB 2026 • By Finni • 4 min read • Investor Strategy

For homeowners and property investors alike, interest rates are one of the most powerful forces shaping household cash flow. Yet many borrowers make a costly mistake: they stop paying attention.

The reality of holding a mortgage is simple. Over time, interest rates change – and every change has a direct impact on what borrowers pay each month. When rates rise, repayments increase. When rates fall, borrowers should be better off. But that second part often doesn’t happen automatically.

The Reserve Bank of Australia meets eight times a year to assess economic conditions and decide whether to raise, cut or hold the official cash rate. Those decisions flow through to lenders, who then adjust their own rates accordingly. In theory, borrowers move in lockstep with these changes.

In practice, many don’t.

The hidden cost of inattention

For borrowers who aren’t vigilant, interest rate movements can quietly work against them. While lenders are quick to pass on rate increases, rate reductions are not always delivered evenly – particularly to long-standing customers.

“If rates go up, borrowers feel it immediately,” says Eva Loisance, principal at investment-focused mortgage brokerage Finni. “But when rates come down, many borrowers assume their lender will automatically do the right thing. Often, that’s not the case.”

This asymmetry creates what brokers often refer to as a “loyalty tax” – a scenario where borrowers who stay put end up paying more than new customers being actively courted by lenders.

Why investors should take note

For property investors, interest rate changes introduce an additional layer of complexity. Unlike owner-occupiers, investors rely not just on wages, but also on rental income to service their loans.

And here’s the catch: while interest rates can change several times a year, rental income generally cannot.

“Yield is often an undervalued consideration for investors,” Loisance explains. “Capital growth tends to dominate the conversation, but yield is what actually determines whether you can manage your repayments comfortably.”

Rents are typically reviewed annually, meaning investors are locked into a fixed income stream for 12 months at a time. If interest rates rise during that period, investors absorb the full impact immediately – with no ability to offset it through higher rent until the next review.

That’s why maximising rental income at every review is critical. But it’s only half the equation.

“The other lever investors can pull is their mortgage,” Loisance says. “You can’t adjust rent mid-lease, but you can change your lender.”

Loyalty isn’t always rewarded

One of the least understood aspects of the mortgage market is how lenders treat existing customers versus new ones.

“Typically, the longer a loan is left untouched, the less inclined a lender is to adjust the rate in the borrower’s favour,” Loisance says. “But if left unchecked, they will push rates higher when it suits them.”

This dynamic is driven by competition. Lenders are constantly fighting for new borrowers, offering sharper pricing, cashback incentives and more flexible features. Existing customers, on the other hand, are often placed on the back burner unless they make noise – or leave.

“It sounds counterintuitive, but loyalty is often punished,” Loisance says. “Borrowers who ‘set and forget’ are usually the ones paying the highest rates.”

Refinancing isn’t as hard as people think

Despite this, many borrowers hesitate to act. Refinancing is widely perceived as complex, time-consuming and disruptive – a perception that often stops borrowers from even exploring their options.

“The tendency is to set and forget,” Loisance says. “People assume refinancing will be painful, or that the savings won’t be worth the effort.”

In reality, the process is far simpler than most expect.

“A simple notification is all that’s required to get the ball rolling,” she says. “In many cases, borrowers can be refinanced into a more suitable loan in as little as two weeks.”

Technology, streamlined credit policies and competitive lender appetites have transformed refinancing from a once-daunting process into a relatively straightforward one – particularly when guided by a specialist broker.

Vigilance is the real advantage

For investment-focused brokers, monitoring interest rates isn’t a once-a-year exercise. It’s an ongoing discipline.

“Our role is to keep borrowers informed and vigilant,” Loisance says. “That means watching both movements in the cash rate and what individual lenders are doing independently of the RBA.”

This distinction matters. Even when the cash rate is unchanged, lenders frequently reprice their loan books, adjust margins or introduce sharper offers to attract market share. Borrowers who aren’t paying attention can miss out – or worse, quietly slide onto uncompetitive rates.

A simple rule of thumb

Loisance offers one final piece of advice for both homeowners and investors.

“If you haven’t reviewed your home loan rate in the last six months, you should at least review your options,” she says. “Lenders are constantly vying for borrowers’ business, and there is almost always someone in the market offering a sharper rate than the one you’re on now.”

In a market where interest rates can change quickly – and lender behaviour even faster – vigilance isn’t just good practice. It’s one of the most effective ways borrowers can protect their cash flow and long-term financial wellbeing.

Because when it comes to home loans, what you don’t see can hurt you most.