Between 2020 and 2022, hundreds of thousands of Australian borrowers locked in fixed rates at historic lows. Some secured rates below 2%. Many locked in between 2% and 3%. At the time, it felt like the obvious move.
Now, in 2026, those fixed terms are ending. And they are ending into a rate environment that looks nothing like the one borrowers locked into. The RBA cash rate sits at 4.35% after three increases in 2026 alone. The average variable rate is above 6.8%. And the revert rate your lender quietly assigns when your fixed term ends? That is almost always higher again.
If your fixed rate is expiring soon and you want to compare your actual refinancing options, head to our fixed rate expiry refinancing page or use the form below to speak with a specialist.
What is the fixed rate cliff?
The fixed rate cliff refers to the wave of Australian borrowers whose pandemic-era fixed rate home loans are expiring and repricing to significantly higher variable rates. The term has been used since 2023, when the first major wave of two-year fixed terms expired. In 2026, borrowers who fixed for three, four or five years during 2021 to 2023 are now hitting the same wall.
The core problem is simple. Borrowers locked in rates between 2% and 3%. They are now reverting to standard variable rates that sit above 6.5%, and in some cases above 7%. That gap, often 3 to 4 percentage points or more, translates directly into higher monthly repayments.
The RBA's own data showed that the fixed-rate share of total housing credit peaked at nearly 40% in early 2022. By late 2023, it had dropped below 20% as the first wave of expiries rolled through. As of February 2026, less than 5% of outstanding mortgages are on fixed rates. The tail end of the cliff is smaller in volume, but borrowers caught in it face the same repricing shock.
The rate environment then
- RBA cash rate was 0.10% to 3.60%
- Two and three-year fixed rates available below 2% to 4%
- RBA Term Funding Facility gave banks cheap wholesale funding
- Lenders were aggressively competing on fixed rate pricing
- Fixed-rate share of new lending surged past 40%
The rate environment at expiry
- RBA cash rate is 4.35% after three hikes in 2026
- Average variable rate is approximately 6.84%
- Competitive variable rates start from around 5.1% to 6.1%
- Standard revert rates can exceed 6.9% to 7.5%
- Less than 5% of mortgages remain on fixed terms
How the revert rate works
When your fixed rate period ends, your lender does not call you and offer their best deal. They automatically move your loan to their standard variable rate. This is the revert rate, and it is almost always higher than the rates they advertise to new customers or the rates you could get by picking up the phone.
Here is how it typically plays out. Your fixed rate ends on a Tuesday. By Wednesday, your loan is on the lender's standard variable rate. Nobody asks whether you want that. Nobody checks whether it is the best option for you. It just happens. And that standard variable rate? It often sits 0.5% to 1.5% above the competitive variable rates that same lender offers to borrowers who ask.
Banks call this the "loyalty tax" for a reason. Borrowers who do nothing pay the most. Borrowers who call and negotiate, or who refinance, pay less. The difference over 12 months on a $600,000 loan can easily be $2,000 to $5,000 in unnecessary interest.
This is the baseline revert rate for most fixed-rate loans. It is a published rate, but it is not the rate anyone should be paying without question. Major banks and non-bank lenders both set their own standard variable rates, and they vary.
Any discount you had on your fixed rate does not automatically carry over. Some lenders apply a small discount to the revert rate, but it is usually less than what is available if you actively negotiate or refinance. Check your loan contract for the specific revert terms.
Lenders typically contact you about 30 days before expiry. That is not enough time to refinance if you decide to switch. Refinancing applications, valuations and settlements take 2 to 6 weeks. Waiting for the lender's letter means you are already behind.
You can choose to fix again with your current lender for a new term, but the rates available now bear no resemblance to the rate you locked in originally. Current one-year to three-year fixed rates in May 2026 are broadly in the range of 5.5% to 6.5%, depending on the lender and loan type.
How much more will you pay? Worked examples
The impact depends on three things: your original fixed rate, the rate you revert to, and your remaining loan balance. Below are two reference scenarios showing the approximate monthly repayment increase when a fixed rate expires.
These are general reference examples only. Actual figures vary by lender, remaining loan term, loan type and individual circumstances.
Even if you fixed more recently at a higher rate, the jump to your lender's standard variable rate still matters. The question is not whether your repayments will increase. It is whether you are going to pay the highest available rate by doing nothing, or a lower one by taking action.
Your options when your fixed rate expires
You have four main paths when your fixed term ends. The right one depends on your rate, loan size, equity position and whether you want flexibility or certainty. Here is what each option actually involves.
1. Do nothing (revert to variable)
If you take no action, your loan reverts to the lender's standard variable rate. This is rarely the best outcome. The revert rate is almost always uncompetitive. However, if you are in the process of selling, or plan to pay off the loan within a few months, the short-term cost may be acceptable. For everyone else, this is the most expensive option available.
2. Negotiate a retention rate
Call your current lender and ask for a better rate. Banks have retention teams whose job is to keep you from leaving. Mention that you are comparing refinancing options. If your repayment history is clean and your LVR is reasonable, there is a good chance they will offer a discount off the standard variable rate. This option avoids the cost and hassle of refinancing, but the rate you get may still be higher than what a different lender would offer.
3. Re-fix with your current lender
You can lock in a new fixed rate for another one to five years. In May 2026, fixed rates are broadly in the 5.5% to 6.5% range depending on the lender and term. Re-fixing gives repayment certainty, but it typically removes access to offset accounts and limits extra repayments. If you think rates may come down in 2027, fixing now could mean missing out on lower rates later. A split loan (part fixed, part variable) is one way to hedge.
4. Refinance to a new lender
Switching lenders can secure a significantly lower rate than your current lender's revert or retention offer. Competitive variable rates in May 2026 start from around 5.1% to 6.1% for well-qualified borrowers. Refinancing involves application, valuation and settlement costs, but these are often offset by the interest savings within 12 to 18 months. Check for any refinancing costs before committing, including discharge fees from your current lender.
| Option | Typical rate range (May 2026) | Best for | Watch out for |
|---|---|---|---|
| Do nothing (revert) | ~6.5% to 7.5%+ | Short-term only (selling, paying off soon) | Highest cost option. Adds up fast. |
| Negotiate retention rate | ~6.0% to 6.6% | Happy with current lender, want to avoid paperwork | May still be above market. No guarantee of best rate. |
| Re-fix | ~5.5% to 6.5% | Want repayment certainty for 1 to 3 years | Limits flexibility. Break costs apply if you sell or refinance early. |
| Refinance | ~5.1% to 6.1% | Want the most competitive rate with full loan features | Takes 2 to 6 weeks. Costs involved (often offset by savings). |
Rates are approximate ranges as of May 2026 for owner-occupier, principal and interest loans. Actual rates depend on LVR, loan amount, employment type and lender. Always verify current rates with your lender or broker.
The 90-day action plan before your fixed rate expires
The borrowers who come out of fixed rate expiry in the best position are the ones who start early. Ninety days before expiry gives you time to compare, negotiate, apply and settle without spending a single day on the revert rate. Here is the practical order of operations.
Common mistakes when your fixed rate expires
Most of these are avoidable. They come down to inaction, assumptions or bad timing.
Doing nothing and accepting the revert rate
This is the single most expensive mistake. Borrowers who do nothing pay the highest rate their lender offers. Every month on the revert rate is money you did not need to spend. Even a five-minute phone call to your lender's retention team can save you hundreds per month.
Call your lender or a broker before your fixed rate expires.
Waiting for the lender's letter
Most lenders send a notification about 30 days before expiry. That is not enough time to refinance. By the time you receive it, compare options, apply and settle, you have already spent weeks on the revert rate. Start the process at least 90 days early.
Start comparing at least 90 days before expiry, not 30.
Comparing rates but ignoring total cost
A rate that is 0.2% lower but charges $2,000 in application fees and has no offset account may cost you more overall. Compare the comparison rate (which includes most fees), check whether an offset account is included, and ask about ongoing fees. The cheapest rate is not always the cheapest loan.
Compare the comparison rate and total cost, not just the headline rate.
Assuming you cannot refinance
Some borrowers assume that because rates have risen, or because their property value has changed, they cannot refinance. This is not always true. If you have been meeting your repayments, have reasonable equity and your financial position is stable, you may have more options than you think. The only way to know is to check.
Get a proper assessment. Do not assume you are stuck.
Re-fixing without checking the rate environment
Re-fixing gives certainty, but if economists expect rates to fall in 2027, locking into a new fixed rate now could mean paying more than necessary for the next two to three years. On the other hand, if rates continue to rise, a fix provides protection. The point is to make a considered choice rather than a reflexive one.
Understand the trade-offs before choosing fixed, variable or split.
Common fixed rate expiry scenarios
Locked in at 2% to 3% during COVID
You are facing the largest repayment jump of any group. A $600,000 loan going from 2.5% to a revert rate near 6.9% means roughly $1,500 more per month. The silver lining: you have had years of lower repayments, which may have let you build savings or pay ahead on the loan. Use that buffer to cover the transition and start comparing refinancing options immediately.
Fixed at 4% to 5% in 2023
Your jump is smaller but still meaningful. An increase of $300 to $600 per month is common. You also have a shorter window before the increase, since these loans are typically on two-year terms. The good news is that a competitive refinance could bring you close to or below what you are currently paying. A retention call to your current lender is the fastest first step.
Investment property loan
Investment loans typically carry higher rates than owner-occupier loans, and the revert rate is higher again. But the interest is tax-deductible, which changes the after-tax arithmetic. If your LVR is below 80% and rental income is stable, investment property refinancing may open doors to lenders with competitive investor rates. Some borrowers also use this moment to switch from interest-only to principal and interest, or vice versa.
Thinking about selling soon
If you plan to sell within the next three to six months, refinancing may not make financial sense once you account for setup costs and the short benefit window. In this case, calling your lender for a temporary retention rate, or simply accepting the revert rate for a short period, may be the more practical path. Run the numbers before deciding.
When should you speak to a finance specialist?
The short answer: before your fixed rate expires, not after. A specialist can compare lender options, check whether you qualify for a better rate, and help you avoid overpaying on the revert rate. It makes particular sense if any of these apply:
A finance specialist can assess your current loan, compare what is available and help you act before the clock runs out. The cost of doing nothing for even two months on a high revert rate usually exceeds any refinancing fees you would pay.
