2025 Mortgage Refi Boom in Australia: The AI Advantage

After years of pain from rising interest rates, Australian borrowers may finally catch a break - and in a big way. With inflation slowing and new trade headwinds emerging, including U.S. tariffs under Donald Trump's policy agenda, economists are now forecasting up to four rate cuts by the Reserve Bank of Australia in 2025, with a possible 50 basis point cut as early as May.

For homeowners, that means opportunity - and for lenders, it means pressure. Rather than a gradual uptick, the refinancing trend could surge all at once, with millions of borrowers acting quickly to lock in better deals. Lenders that are not ready may find themselves overwhelmed by volume - or worse, blindsided by risk.

In my recent interview with Ticker News, I discussed how this scenario creates both opportunity and risk for Australian banks, and why real-time decisioning supported by AI and transaction analytics is now a business-critical capability.

Watch the Ticker interview here:

A Red-Hot Refinancing Market Is Coming in Australia

We're already seeing signs of acceleration. PEXA reported an 8.4% year-on-year increase in refinancing activity in February, and a Mozo survey found that 49% of Australians are actively considering refinancing as rates begin to fall. That's nearly half the mortgage market contemplating a switch - and many will act as soon as lenders start dropping rates.

And they already are. Major institutions including ANZ, Macquarie Bank, Westpac, and BNZ have all announced rate reductions or customer acquisition offers in recent months. But in this environment, success isn't just about cutting rates. It's about how quickly and confidently a bank can make decisions at scale - with precision, with care, and with visibility into real risk.

Why Transaction Data Is Changing the Game

Traditional lending decisions rely on lagging credit reports and infrequent scoring updates. But today's lending environment demands more. Transaction data offers a real-time window into income, spending, liabilities, and behavioral patterns - the kinds of insights that are especially valuable during refinancing booms, when risk can shift quickly.

Thanks to advances in computing power, banks can now process and analyze billions of transactions daily, giving them an unprecedented level of decisioning accuracy.

ANZ Bank has become a standout example of this capability. In partnership with FICO, ANZ implemented daily transaction scoring across 7.7 million customers, drawing from more than 15 million transactions per day. This represents a 3,000% increase in data resolution compared to monthly models - and it has transformed the bank's ability to make smarter lending decisions, detect hardship earlier, and identify both opportunity and risk with greater confidence.

Watch the ANZ-FICO video on daily transaction scoring:

The impact? Smarter lending offers. Early detection of hardship. Improved portfolio performance. This is the edge lenders need when refinancing volumes spike.

First-Party Fraud: The Risk Hiding in Plain Sight

When volumes spike, so do the chances of misrepresentation. First-party fraud - where borrowers exaggerate or conceal their financial position - is a growing challenge in Australia.

According to the FICO Consumer Survey, nearly 1 in 3 Australians believe it's common or justifiable to lie on a loan application. Among Gen Z, that figure rises to 52% - a clear indicator of shifting attitudes around financial disclosure.

Common tactics that won't always be caught by income verification checks include:

• Boosting income temporarily (overtime, contract spikes)
• Closing liabilities pre-approval, then reopening them
• Misstating dependents or omitting leave
• Falsifying documentation with a colleague's help

In a high-pressure environment like rapid refinancing, these behaviors become even harder to spot - unless you're watching what people do, not just what they declare.

That's where AI-driven transaction analytics comes in. By comparing claimed income and liabilities to real behavior, banks can surface discrepancies in real time - protecting themselves from downstream risk and ensuring borrowers aren't approved for loans they can't afford.

The Compliance Imperative

Speed is essential, but not at the expense of control. In a tightening regulatory environment, consumer duty and fair lending expectations are under the microscope. Banks must demonstrate not only that their decisions are fast - but that they're explainable, unbiased, and aligned with customer wellbeing.

FICO's work with leading Australian institutions shows that AI-powered decisioning systems, when properly governed, can enhance transparency rather than obscure it. With explainable AI models and clear reason codes, lenders can maintain high-speed processing while remaining accountable.

Risk vs. Speed: You Don't Have to Choose

With the right technology, banks can build fast, adaptive, and safe refinancing experiences. The key pillars:

• AI-Powered Decisioning - Streamline approvals without compromising risk standards
• Daily Transaction Scoring - Unlock real-time customer insights for smarter lending
• Dynamic Pricing Tools - Respond to the market without jeopardizing portfolio health
• Fraud Detection Analytics - Stop misrepresentation before it results in bad debt
• Automation and STP (straight-through processing) - Handle volume surges without increasing manual overhead

The refinancing boom that's coming won't reward the fastest lender - it will reward the most prepared. Banks that are already leveraging AI, real-time analytics, and daily scoring will move with speed and certainty. Those still relying on monthly scoring and legacy workflows risk being left behind.

It's about creating an end-to-end lending strategy that's fit for the speed and complexity of 2025. The coming months could reshape Australia's mortgage market. Because this isn't just a refinancing wave. It's a proving ground for the future of lending.

How FICO Can Help With Mortgage Refinancing