Coming Off a Fixed Rate in Australia? Here’s What Actually Happens Next (and How to Avoid the $9,500 Mistake)
- When your fixed term ends, your loan automatically rolls onto the lender’s revert rate, usually its standard variable rate, and repayments jump with no call and no warning unless you act first.
- On a $650,000 loan, rolling from a 5.00% fixed rate to a 6.90% revert rate adds about $792 a month, roughly $9,500 a year, on the same loan (an illustration, not a quote).
- Next step: start comparing your options 3 to 4 months before expiry. If your fixed rate ends within the next 90 days, start the conversation today.
- You have four options: do nothing and roll onto the revert rate, refix with your current lender, negotiate a discount with your current bank (often 0.2 to 0.4%), or refinance to a more competitive lender, where the biggest savings usually sit.
- A competitive refinance on a $650,000 loan over 30 years: a 6.90% revert rate means repayments of $4,281 a month; a 5.80% rate via a broker means $3,814, a difference of $467 a month or $5,604 a year (illustrative).
- Refinances take 4 to 8 weeks to settle, and the small fees involved (discharge, settlement and government registration) typically total $400 to $700.
Hundreds of thousands of Australian homeowners are coming off fixed rates this year, and what happens in the weeks before the term ends could be the most expensive financial decision you make this decade. The RBA’s 11 August meeting held the cash rate, and rollover pricing now reflects it. Price the difference with our refinance savings calculator.
For the long view on whether to hold out at all, see why waiting for 3% rates can cost you.
The pattern we see again and again: borrowers don’t act, the bank rolls them silently onto a revert rate, and repayments jump $600 to $1,000 a month overnight. No call. No warning. Just a higher direct debit, sometimes 30 days later. Borrowers with a wind-down lender face this sharpest: see our piece on HSBC’s exit and what it means for its home loans.
Rollovers are also where offset problems hide: ASIC recently found widespread offset linkage failures, so while you are reviewing the rate, run our offset check calculator as well.
This article covers what actually happens when your fixed rate ends in Australia, what your real options are, and how to time the refinance properly. If refinancing itself is unfamiliar territory, our guide to refinancing an Australian home loan covers the mechanics from start to settlement. It costs nothing to find out where you stand.
In short: when your fixed rate expires your loan automatically rolls onto the lender’s standard variable rate, which is often well above the sharpest deals available. That jump is the fixed rate cliff. You do not have to accept it: refinancing or renegotiating before the term ends can save thousands, but the lender will not do it for you, so acting in the weeks before expiry is what protects you.
What is the “fixed rate cliff”?
The fixed rate cliff is the jump in repayments when an Australian home loan fixed between 2020 and 2022 at rates of 1.99% to 2.49% rolls onto today’s standard variable rates of 6.5% to 7.2%. On a $650,000 loan, rolling from a 5.00% fixed rate to a 6.90% revert rate adds about $792 a month, roughly $9,500 a year (illustrative).
Between 2020 and 2022, hundreds of billions of dollars of Australian home loans were fixed at rates between 1.99% and 2.49%, historic lows driven by RBA pandemic policy. Those fixed terms are now expiring in waves.
The “fixed rate cliff” is the term used to describe what happens when borrowers come off those ultra-low rates onto today’s standard variable rates of 6.5% to 7.2%. The jump is brutal.
What happens when my fixed rate expires in Australia?
When your fixed rate expires in Australia, your loan automatically rolls onto the lender’s revert rate, typically the standard variable rate rather than its best variable rate, with no phone call, advice or comparison. Your direct debit jumps, often by hundreds of dollars a month, and many borrowers notice only after several billing cycles.
This is the question most borrowers don’t ask until it’s already happened. The honest answer: your bank does the minimum legally required, which is almost nothing.
Here’s the typical sequence:
- 30 to 60 days before expiry: Your lender may send a generic letter or email. It usually mentions your fixed term ends, lists a couple of options, and includes the standard variable rate (which is almost always their worst rate).
- The day your fixed term expires: The loan automatically rolls onto the revert rate, typically the standard variable rate, not their best variable rate. No phone call. No advice. No comparison.
- First repayment after expiry: Your direct debit jumps. Often by hundreds of dollars per month.
- Weeks later: You notice. By then you’re already paying the higher rate, sometimes for several billing cycles before you act.
The “revert rate” is rarely your bank’s best rate. It’s the rate they apply by default if you do nothing. They’re betting you won’t check. Most banks have a separate, lower rate they’ll offer if you ask, but they don’t volunteer it. You have to call and negotiate, or have a broker do it for you.
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What are the four real options when your fixed rate expires?
A borrower coming off a fixed rate in Australia has four options: do nothing and roll onto the revert rate, typically 0.5 to 1.5% above the market; refix with the current lender; negotiate a discount with the current bank, often 0.2 to 0.4%; or refinance to a more competitive lender, often 0.5 to 1.0% below the current bank’s best offer.
You have more choice than the bank lets on. Every borrower in Australia who’s coming off a fixed rate has these four options:
| Option | What it means for you |
|---|---|
| 1. Do nothing, roll onto the revert rate | The path of least resistance, and almost always the worst financial outcome. You pay the bank’s standard variable rate, which is typically 0.5 to 1.5% above what’s available in the market. |
| 2. Refix with your current lender | Lock in a new fixed term at today’s rates. Useful if you want certainty, but you’re still only seeing one lender’s products. Most borrowers can do better elsewhere. |
| 3. Negotiate a discount with your current bank | Threaten to leave and they’ll often discount the rate by 0.2 to 0.4%. It works, but it’s a one-off, and the next year you’ll have to do it again. |
| 4. Refinance to a more competitive lender | Move the loan to a different bank or non-bank lender offering a better rate. This is where the biggest savings usually live, often 0.5 to 1.0% below your current bank’s best offer. |
The right option depends on your numbers, your goals, and how much equity you have. But you can’t make a sensible decision without seeing what’s actually available across the market.
When should I act?
Start the refinancing conversation 3 to 4 months before your fixed rate expires. Refinances take 4 to 8 weeks to settle, lenders shift rates frequently, valuations and approvals take time, and negotiation works better with a real alternative in hand. If your fixed rate ends within the next 90 days, today is the day to start.
Earlier than you think. The best time to start the refinancing conversation is 3 to 4 months before your fixed rate expires. Here’s why:
- Refinances take 4 to 8 weeks to settle from application to lender funding. Starting the day your rate expires means you’ll have already paid weeks or months at the higher revert rate.
- Lenders shift their rates frequently. Locking in a competitive rate early protects you from market movement.
- Valuations and approvals take time. Some lenders are slow. Building in a buffer means you’re not stuck on a revert rate while paperwork crawls through.
- Negotiation works better when you have a real alternative. If your bank knows you’re already approved with a competitor, they’ll fight harder to keep you.
The 90-day rule: If your fixed rate ends within the next 90 days, today is the right day to start the conversation. Not next month. Not “when the letter comes.” Today.
Moving before the fixed term actually ends? That is a different decision: breaking a fixed loan early can trigger a break cost that only your lender can quote precisely, while refinancing at expiry avoids it entirely. Our guide to home loan break costs covers how lenders calculate them, and how to get a written break quote before you commit.
What does a competitive refinance actually look like?
On a $650,000 owner-occupied loan over 30 years, a 6.90% revert rate means repayments of $4,281 a month, while a 5.80% rate secured through a broker means $3,814 a month: a difference of $467 a month, $5,604 a year, and approximately $168,000 of interest over the life of the loan (illustrative figures).
Real numbers, on a $650,000 owner-occupied loan over 30 years:
- Revert rate (the default trap): 6.90%, repayments of $4,281 per month
- Best available rate via a broker: 5.80%, repayments of $3,814 per month
- Difference: $467 per month, or $5,604 per year, back in your pocket
- Over the life of the loan: approximately $168,000 in saved interest
And to be clear, that’s not theoretical. That’s the gap between what your bank quietly puts you on if you do nothing, and what a broker can secure for you by comparing 40+ lenders. The loan is the same. The property is the same. Just a different lender.
What is the five-step refinancing process when coming off a fixed rate?
Refinancing when coming off a fixed rate runs in five steps over eight weeks: a quick review in week one; lender comparison and selection in weeks one to two; application and documents in weeks two to three; valuation and approval in weeks three to five; and settlement in weeks five to eight, when the new lender pays out the old one.
If you’ve never refinanced before, here’s what actually happens:
- Quick review (week 1): A broker reviews your current loan, income, and goals. They tell you whether refinancing makes sense and roughly what you could save.
- Comparison and selection (week 1 to 2): The broker compares lenders on your specific situation, rate, fees, features, serviceability, and recommends the best fit.
- Application and supporting documents (week 2 to 3): Payslips, ID, bank statements, current loan statement. The broker prepares and submits everything.
- Valuation and approval (week 3 to 5): The new lender orders a property valuation and assesses the application. Most refinances are approved within this window.
- Settlement (week 5 to 8): The new lender pays out the old one, the loan transfers, and your new lower repayments begin. You don’t move house. You don’t change anything physical. Just a better rate, a better lender, more money in your pocket each month.
Your existing bank doesn’t get a say. You’re not asking permission. Refinancing in Australia is a competitive market and lenders compete for your business, that’s the whole point.
Common questions about fixed rate expiry in Australia
Will my bank automatically offer me their best rate when my fixed term ends?
No. Your bank will roll you onto the revert rate, typically the standard variable rate, which is rarely competitive. To get their best available rate, you usually have to call, ask, and negotiate. Even then, you’re only seeing one bank’s products.
How much can I actually save by refinancing off a fixed rate?
On a typical $650,000 loan, the difference between the bank’s revert rate and a market-competitive rate is around $400 to $700 per month, or $5,000 to $9,000 per year. Over the life of a 30-year loan that’s tens to hundreds of thousands of dollars in interest.
Do I have to leave my current bank to get a better rate?
Not always. Sometimes your current bank will match a competitive offer if you ask hard enough. But you need a real, approved alternative to negotiate with. That’s where a broker helps, they’ll either move you to a better lender, or use a competing approval as leverage to negotiate down your existing bank’s rate.
Will refinancing cost me anything?
The broker’s service costs you nothing, lenders pay our commission. The refinance itself may have small fees (discharge fee from your old bank, settlement fee for the new one, government registration costs), typically totalling $400 to $700. On a $9,000 annual saving, these are recouped in the first month.
How long does it take to refinance off a fixed rate?
Typically 4 to 8 weeks from start to settlement, depending on the lender and how quickly documents come together. This is why starting 3 to 4 months before your fixed term expires is ideal.
What if I refinance and rates drop again?
You can refinance again. There’s no penalty after you’re on a variable rate (or once a new fixed term ends). A good broker reviews your loan annually and tells you when it’s worth switching again.
The honest summary
The fixed rate cliff is real, but it’s not the cliff itself that costs people money, it’s the silence after they roll off. The bank’s revert rate is the path of least resistance, and it’s almost always the worst financial outcome.
A quick conversation with a broker, 3 to 4 months before your fixed rate expires, is one of the highest-return things you can do for your household finances. Lenders pay our fees. You don’t.
The bottom line: If your fixed rate is expiring this year, the worst thing you can do is nothing. The best thing you can do is find out exactly where you stand and what your options are, before the bank quietly decides for you.
Sources and useful references
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