Commercial refinancing after the rate rises: the case for looking beyond headline pricing

Commercial borrowers are dealing with a more nuanced lending market than they were a year ago.

The Reserve Bank has increased the cash rate three times in 2026, taking it to 4.35 per cent, and those increases have flowed through to business lending rates. At the same time, competition between bank and non-bank lenders remains strong. That combination matters. Funding may still be available, but refinancing a commercial facility is not simply a matter of finding a cheaper rate.

“Competition on non-price factors has also increased, supporting the supply of business credit.” Reserve Bank of Australia, February 2026

A refinance is a new credit conversation

A refinance will generally involve a fresh credit assessment. Depending on the lender and transaction, the assessment may consider the property, borrower cash flow, existing debt position, proposed term and repayment or refinance pathway.

A valuation that supported a transaction several years ago may not produce the same lending outcome today. Higher interest costs can also affect servicing, even where the underlying business or property continues to perform well.

For investment property, factors such as lease expiry profiles, tenant quality and vacancy assumptions may be relevant. For development or transitional lending, attention may instead fall on remaining costs, contingency, project timing and the proposed exit.

Rate is only one part of the decision

In a competitive lending market, it is tempting to compare facilities by interest rate first. Experienced borrowers and advisers usually look wider.

A lower headline rate may offer limited advantage if the lender’s valuation approach, covenants, amortisation requirements, security position or credit policy do not suit the transaction. Equally, paying for flexibility that is not required may make little commercial sense.

The more useful question is whether the lender’s appetite and assessment approach align with the transaction as it stands today.

Prepare before the maturity date

Strong refinancing discussions generally begin before the existing facility becomes urgent. That creates time to update financial information, test valuation assumptions, identify potential servicing issues and consider available funding pathways.

The practical takeaway is simple: treat a refinance as a new transaction, not an administrative extension of the old one.

If you have an upcoming commercial property refinance, the Allott Capital team can discuss the circumstances of the transaction and possible next steps.