What happens if I do nothing when my fixed rate expires?

Lenders write the revert rate into the fixed rate contract. It is rarely their sharpest rate. Borrowers who do nothing can end up paying half a percentage point or more above what the same lender offers a new customer on the same product, and the gap compounds every month it is ignored. On a $700,000 loan, half a per cent is about $290 a month.

Re-fix with the current lender: most lenders let you lock a new fixed rate in the last 60 to 90 days of the term, and it takes effect when the old term ends. Some charge a rate lock fee. Negotiate the variable rate: a phone call to the lender's retention team asking for their current new-customer rate often works, especially with a competing offer in hand. Refinance: switch to another lender, timed so settlement lands on or just after the expiry date to avoid break costs. Refinancing takes four to six weeks, so the application needs to start two months out.

A fixed rate expiry is not a deadline with a penalty, which is why people let it slide. The cost is the gap between the revert rate and the best available rate, every month, until you act. Borrowers who let it drift for a year on a large loan lose thousands. Lenders know this, which is why the revert rate is set where it is.

Re-fixing suits borrowers who want certainty on repayments and expect rates to stay flat or rise. Variable suits borrowers who want an offset, plan to make extra repayments, or expect cuts. Splitting the loan between fixed and variable covers both. The decision depends on your situation and view of rates, not on what the lender suggests in the expiry letter.