Fixed-Rate Cliff 2026: When Your Rate Expires

Hundreds of thousands of Australian mortgages fixed at 2 to 3% during 2021 and 2022 are now rolling onto variable rates of 6.8 to 7.1%. On a typical $500,000 loan, that can mean an extra $1,300 or more per month in repayments. For first home buyers who fixed their first mortgage, this is one of the most financially impactful moments they will face. The good news: you have four clear options when your fixed rate ends, and acting 60 to 90 days early can save you thousands.

The scale of the fixed-rate cliff

During COVID, Australians rushed to lock in historic low rates. The RBA cash rate sat at 0.10% for most of 2021, and lenders offered 2 and 3-year fixed rates near 2%. Most of those loans expired through 2023 and 2024. A second wave of fixes taken in mid-2023 at around 5.5% began expiring in mid-2025. Three-year fixes from 2022 and 2023 are now expiring through 2026, with some borrowers rolling off through early 2027.

The cliff is not over. If you fixed your first mortgage during the pandemic and have not yet rolled, your turn is coming. Lenders typically write to you 30 to 60 days before expiry. They are not obliged to call. If you do nothing, you roll to the lender's standard variable rate, which is usually the highest rate they charge.

The repayment shock in dollars

The simplest way to see what is coming is to compare the principal and interest repayments on your old fixed rate against the variable rate you will land on. Assuming a 30-year loan term and principal and interest repayments throughout:

• $400,000 loan: at 2.5% fixed, repayments are about $1,580 per month. Rolling to a 7.0% variable rate lifts that to roughly $2,660 per month. Increase of about $1,080 per month, or $12,960 per year.
• $500,000 loan: $1,976 per month at 2.5% becomes about $3,327 per month at 7.0%. Increase of about $1,350 per month, or $16,200 per year.
• $600,000 loan: $2,371 per month at 2.5% becomes about $3,992 per month at 7.0%. Increase of about $1,620 per month, or $19,440 per year.
• $700,000 loan: $2,767 per month at 2.5% becomes about $4,658 per month at 7.0%. Increase of about $1,890 per month, or $22,680 per year.

These are illustrative figures based on the assumptions above. Your actual repayments depend on your remaining loan term, balance, and the rate your lender offers. Use the calculators below to plug in your real numbers.

Your four options when the fixed rate ends

Every borrower coming off a fixed rate has four practical paths. The right one depends on your view of where rates are heading, your appetite for switching lenders, and whether you want flexibility to make extra repayments.

• Option A: Roll to variable. The simplest choice and the default if you do nothing. You move onto your lender's standard variable rate, typically 6.8% to 7.2%. Pros: full flexibility to make extra repayments, use an offset account, or refinance later. Cons: you are exposed to any further RBA increases. A good fit if you believe rates have peaked or you want to pay down faster.
• Option B: Refix at the new rate. Lock in another 1, 2, 3 or 5-year fixed term. Current 2-year fixed rates sit around 6.8% to 7.2%. The trade-off: if the RBA cuts in 2027 (as some economists are forecasting), you may be locked above where variable rates land. Fixed loans also restrict extra repayments. A good fit if you value repayment certainty and want to budget without surprises.
• Option C: Split the loan. Keep part fixed and part variable. Hedges both risks: the fixed portion gives certainty, the variable portion lets you make extra repayments or use an offset account. Common splits are 50/50 or 70/30. A good fit if you cannot decide between the first two options.
• Option D: Refinance to a new lender. The biggest potential saving and the most effort. Comparable lenders frequently offer new-customer rates 0.3 to 0.6% below retention rates for existing customers. On a $500,000 loan, a 0.4% saving is roughly $2,000 per year. Refinance costs (discharge fee, application, conveyancing) typically total around $600 to $1,300 and usually pay for themselves within 6 months.

Watch the cashback offer trap

Several lenders advertise $2,000 to $4,000 cashbacks for borrowers refinancing across. A cashback feels great on day one, but a slightly higher rate over 3 to 5 years can wipe out the entire benefit. The right comparison is not the cashback against the costs, it is the total interest paid over the time you expect to hold the loan. Run the real numbers on the rate, not the headline. The Mortgage Repayment Comparison tool below lets you compare two loans side by side.

When to act and who to talk to

Ideally start the process 60 to 90 days before your fixed rate expires. Contact your lender's retention team and ask what they will offer. Then compare against the wider market, either by contacting other lenders directly or working with a qualified mortgage broker. Brokers play an important role here: they can compare dozens of lenders at once, understand which lenders are sharpening rates for new business, and handle the paperwork involved in switching.

Do not wait until expiry day. If your fixed term ends and you have not chosen, you roll to the lender's revert rate automatically, which is usually the most expensive rate on their book.

If repayments are unmanageable

If you have run the numbers and the new repayments do not fit your budget, you have options. Contact your lender's hardship team immediately. Banks have legal obligations under the National Credit Code to assist customers experiencing financial difficulty. They may offer a short-term repayment pause, an interest-only period, or a longer loan term to reduce repayments. Interest still accrues during a pause, but it buys you time to adjust.

The National Debt Helpline on 1800 007 007 offers free, confidential financial counselling. MoneySmart.gov.au has practical templates for talking to your lender. Acting early gives you more options than waiting until you have missed a payment.

What this means if you are a first home buyer

If you fixed your first mortgage three to five years ago, you have likely built equity through both repayments and capital growth. Refinancing may now unlock better terms than you could access as a first-time borrower. A few specific points to consider:

• If you bought under the First Home Guarantee or 5% Deposit Scheme, your loan may still have LMI saved by the government guarantee. Check with Housing Australia about how refinancing affects scheme participants. Some lenders accept scheme refinances; others do not.
• If you have crossed the 80% loan-to-value threshold (because property values rose or you paid down principal), you may escape LMI on a refinance even if you originally paid it on purchase.
• Use a refinance as a chance to add an offset account if you do not already have one. The interest saved through an offset compounds over the life of the loan.

What this means for you

Practical takeaways if your fixed rate is expiring in 2026:

• Mark the expiry date in your calendar and start comparing options 90 days before, not 30.
• Run the real repayment difference using your loan balance and remaining term, not a generic estimate.
• Always ask your current lender what they will offer to keep you, then compare with the wider market.
• Speak with a qualified mortgage broker if you want a quick view across multiple lenders without making the calls yourself.
• If repayments will be a stretch, contact your lender's hardship team or the National Debt Helpline early.

Run the numbers

Use these tools to understand how the cliff affects your specific loan:

• Mortgage Repayment Comparison - compare two loan scenarios side by side, including cashback offers, so the real cost over the life of the loan is clear.
• Rate Shock Tester - see what happens to your repayments if rates move another 0.25% to 1.5% either way from where you land.
• Borrowing Power Calculator - model how much a lender will comfortably lend you today, useful context if you are considering refinancing at a different loan size.
• Mortgage Offset Calculator - estimate the interest you would save by keeping savings in an offset account against your new variable loan.