The Fixed Rate Cliff: Should You Refinance Now?
Millions of Australians are rolling off ultra-low fixed rates. Here's what you need to do.
Raj Bhangu
Principal Mortgage Broker
Key Takeaways
- 1Fixed rates from 2021-2023 (often under 3%) are ending - you may roll onto 7%+ variable
- 2Monthly repayments can jump $1,000+ when your fixed period ends
- 3Start refinancing process 2-3 months before your fixed rate ends
- 4Options: negotiate with current bank, refinance to new lender (rates from 5.69%), or fix again
If you locked in a fixed rate between 2021-2023, you likely secured a rate under 3%. Now, as those fixed periods end, you're facing the "fixed rate cliff."
Understanding the Cliff
Here's what typically happens:
- Your fixed rate ends (e.g., 2.5%)
- You automatically roll onto your lender's standard variable rate (often 7%+)
- Your repayments can jump by $1,000+ per month
Real Example
Client scenario we helped recently:
- Loan amount: $550,000
- Fixed rate (ending): 2.49%
- Lender's variable rate: 7.24%
- Monthly increase: $1,380 (from $2,170 to $3,550)
Your Options
- Stay and negotiate: Call your bank and ask for a better rate. They often have retention offers.
- Refinance to a new lender: We're seeing rates from 5.69% with cash back offers up to $4,000.
- Fix again: Current 2-3 year fixed rates are around 5.3-5.5%.
When to Start
Don't wait until your fixed rate ends. Start the process 2-3 months before:
- Refinancing takes 4-8 weeks
- You can lock in rates now for settlement later
- Avoid even one month on the higher variable rate
Fixed rate ending soon? Let us compare your options. Our service is free.
Related Tool
Refinancing Savings Calculator
Calculate how much you could save by switching to a lower rate.
Sources & References
This article references information from the following authoritative sources:
Raj Bhangu
Principal Mortgage Broker
Expert mortgage broker helping Australians achieve their property dreams with personalized home loan solutions.
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As a mortgage broker, iSmart Finance receives commissions from lenders when we successfully arrange a home loan. This does not affect the interest rate or fees you pay. Our service is free for you, and we're committed to finding the best loan for your needs.
About iSmart Finance
iSmart Finance Group ACN 608 986 554 is Credit Representative 481761 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237). We are members of the Finance Brokers Association of Australia (FBAA) and comply with the National Consumer Credit Protection Act 2009.
Our content is based on industry expertise, regulatory guidelines from ASIC and APRA, and data from the Reserve Bank of Australia. All information is current as of the publication date and subject to change.
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