Surviving the Fixed-Rate Cliff
What is the fixed-rate cliff?
Between 2020 and 2022 many borrowers locked in mortgage rates as low as 1.99 – 2.29 per cent. As those fixed terms expire through 2025 their loans automatically revert to the lender’s variable rate, often north of 6 per cent, causing an abrupt jump in repayments.
How steep is the drop in 2025?
Real-world examples show the pain: a Melbourne owner whose 2.09 per cent fix ended in February now faces a 6.6 per cent revert rate, while Westpac’s one-year fixed of 5.79 per cent rolls to 7.54 per cent—adding about $585 a month on a $500 k loan.
Six months before expiry – audit your loan
Pull out the contract and confirm the exact roll-off date, the revert rate and any loyalty discounts that may (or may not) apply. Calculate the new repayment figure now so the hit doesn’t blind-side your budget. If the numbers look scary, start a savings buffer or funnel any surplus cash into an offset or redraw to soften the blow.
Three months out – negotiate or refinance
This is the prime window to call your lender’s retention team and ask for a sharper variable discount or a new fixed offer. If they won’t play ball, begin a full refinance application so it can settle before the cliff arrives—remember a refinance can take 4-6 weeks once valuations and verifications start. Keep an eye on cash-back incentives and lower serviceability buffers that have emerged since the RBA began easing.
One month out – stress-test and adjust
Run your household budget at the worst-case revert repayment and trim any discretionary spending that pushes you into the red. Redirect that “practice” payment into your offset so the balance earns its keep. Check direct debits and insurance premiums that might bounce when the new repayment lands.
After the switch – keep shopping
Even if you accepted the bank’s first offer, revisit the rate every six months; lenders often reserve their best discounts for squeaky-wheel customers. If the RBA’s next cuts flow through, channel the saving into your principal rather than dropping your repayment—every extra dollar now shortens the loan and cushions you against future hikes.
How Money Wise Lending can help
Our brokers track every lender’s roll-off policy, rate special and cash-back in real time. We can model the hit to your repayments, negotiate an internal rate match, or move you to a sharper lender before the cliff arrives. We’ll also structure split, offset or redraw options so you keep flexible access to spare cash while still killing interest. Book a five-minute call and we’ll map out a personalised survival plan.
General information only. It doesn’t consider your objectives, financial situation or needs. Seek independent advice before acting on this content.
