What is a Fixed-Rate Cliff and How Can Refinancing Help?

Is your fixed-rate mortgage coming to an end soon? It can be an overwhelming situation for many of you, especially when you hear rate-rise news. Therefore, we are here to provide you with some beneficial tips for a smooth transition. Like many Australians, you may have taken advantage of the interest rate when it was low. In 2023, it has been estimated that around 880,000 fixed rate loans will come to their end.

What is the Fixed Rate Cliff in Australia and What If a Fixed Rate Expires?

Mortgage rates dropped dramatically during the pandemic. This was the case for loans on fixed terms. If you let your fixed-rate home loan expire without taking action, it will normally revert to the lender’s variable rate. There will most certainly be no fees or paperwork associated with this strategy, but it is not always the best option. This is because the revert rate is typically much higher than other variable interest rates on the market. So, rather than waiting for your fixed rate to expire and revert to a typical variable interest rate, you might want to start planning sooner.

Can You Refinance with a Fixed Rate?

Yes, you can refinance a fixed rate home loan before your fixed rate expires. However, it may incur break costs. In some circumstances, break costs may outweigh your savings when you refinance your home loan. However, this is not always the case. You can speak to Star Homeloans who can better help you choose the right option.

When your fixed rate is nearing its end, it is crucial to work with a broker without accepting any rate. While you may be finding yourself overwhelmed with a more expensive home loan, there may be some competitive rates that you can find. Star Home Loans can help you negotiate a better rate or switch to another lender if you want.

How to Prepare for the End of Fixed Rate Home Loan?

With the interest rates increasing over the past few months, you must think about how you can prepare if your fixed rate is nearing its end. It will help you to avoid any unnecessary surprises when your monthly repayment amount increases. Unfortunately, higher repayments will be unavoidable as interest rates are much higher than they were before. Therefore, it’s a good idea to think about your next step while considering your home loan a couple of months before your fixed rate home loan expires. You can discuss your circumstances with Star Homeloans as we can help you get out of this situation.

Fixed or Variable?

It is largely expected that there will be one or two more rate increases, followed by rates remaining on hold for the majority of 2024 before beginning to ease again. Many professionals in the lending industry will encourage you not to accept another fixed-rate agreement right now, even if choosing a variable loan may expose you to further rate rises over the next year.

There are numerous possibilities for house loans, and it all depends on your specific circumstances, so it is critical to seek personal counsel from a professional at Star Homeloans before committing to a new loan.

How to Refinance Properly?

When a fixed-rate loan period expires, lenders frequently do not move existing clients over to the best rates available. As an incentive, new customers are frequently given the most appealing interest rates. However, by refinancing with another lender, you can get lower starting rates, potentially saving thousands of dollars in repayments over time.

Working with a broker like us helps alleviate some of the tension associated with the end of a fixed rate period. We use our extensive network of lenders to identify loans and lenders that are perfect for you. Furthermore, we will be bound by a duty to act in our best interests.


While many banks might try to get your attention by offering cashback for loan products that may not really be the best option for you because of high interest rates, fees, and other unnecessary loan terms, we’ll try to match you with lenders and loans that best match your requirements.

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