What Happens When Your Fixed Rate Expires
When your fixed mortgage rate is coming to an end, it can feel deceptively calm.
There’s no urgent letter demanding action.
No penalty warning flashing on your screen.
No immediate change to your repayments.
So many people assume: “I’ll deal with it when it expires.”
Unfortunately, doing nothing is still a decision - and often an expensive one!
In this post, our mortgage broker explains what actually happens when a fixed rate expires, why banks behave differently before and after expiry, the hidden costs of inaction, and how to approach re-fixing your mortgage more strategically..
WHAT HAPPENS WHEN YOUR FIXED RATE ENDS
On the day your fixed term expires, your mortgage doesn’t stop. Instead, it usually:
Rolls onto the bank’s default (floating or rollover) rate
Loses any negotiated discounts
Becomes fully variable unless you refix
That default rate is almost always higher than the rates available if you actively refix. Banks don’t advertise this loudly, of course, but it’s standard practice.
WHY DEFAULT RATES ARE SO HIGH
Default rates exist for one main reason: Inertia is profitable!
Borrowers who don’t actively engage, pay more interest, are less likely to negotiate and have less pricing leverage.
It’s not personal - it’s behavioural economics.
Banks price aggressively before expiry to retain you. After expiry, the incentive disappears.
THE CRITICAL TIME WINDOW MOST PEOPLE MISS
One of the biggest misunderstandings is when you can act. You do not need to wait until the expiry date!
In most cases, you can:
Negotiate rates 30–60 days before expiry
Secure future rates in advance
Compare options without pressure
Avoid ever rolling onto a default rate
Waiting until after expiry puts you on the back foot.
WHY BANKS NEGOTIATE BEFORE (NOT AFTER)
Before Expiry:
The bank knows you can leave easily
You are a retention risk
Pricing discounts are available
Cashbacks and incentives are more likely
After Expiry:
You’ve lost urgency
The loan is already variable
Your leverage drops significantly
Discounts become harder to secure
RATE SHOCK
If interest rates have risen since you last fixed, you might experience ‘rate shock’. This can show up as a large jump in monthly repayments, reduced disposable income and stress around affordability
If this happens, the bank may reassess how you structure the loan, and you may need to think about term length, splits, or cashflow tools.
Remember, doing nothing only amplifies the pressure - the earlier you engage, the more options you retain.
THE SILENT RISK – AFFORDABILITY REASSESSMENTS
Another surprise for many borrowers is that re-fixing your mortgage can sometimes trigger:
Updated affordability checks
Updated assumptions about income
Updated stress testing
This is especially relevant if your income has changed, you’re self-employed, you’ve taken on additional debt, or interest rates are materially higher.
This doesn’t always happen, but when it does, being proactive matters.
DON’T TRY TO ‘TIME’ THE MARKET
Many people delay re-fixing their mortgage because they hope rates will fall further, they don’t want to ‘lock in at the wrong time’ and news headlines are teasing future rates relief.
But as our mortgage broker covered in earlier blog posts, interest rates move based on wholesale markets, forecasts can change (and often!) and certainty arrives late, if at all
Trying to perfectly time re-fixing often leads to rolling onto high default rates, missed discounts and more stress, not less!
A BETTER WAY
Instead of asking: “Will rates be lower next month?”, ask:
What structure can I live with comfortably?
How much certainty do I need right now?
What happens if rates don’t fall as expected?
How do I avoid unnecessary risk?
This reframes refixing as risk management, not prediction.
COMMON RE-FIXING STRATEGIES – AND WHO THEY SUIT
Fixing Short (6-12 months)
More flexibility
Faster response if rates fall
Higher exposure if rates rise or stay high
Fixing Longer (2+ Years)
Certainty and predictability
Protection from future increases
Less benefit if rates fall
Splitting the Loan
Balances certainty and flexibility
Reduces regret risk
Smooths future refix dates
Remember, there’s no universally correct option - only what fits your situation.
JUST DON’T ROLL OVER
Rolling over is almost never a good strategy. Some borrowers think: “I’ll just leave it floating for now.”
Unplanned floating usually costs more, removes discounts, increases emotional pressure and reduces your negotiating leverage.
If you choose floating, it should be because it fits a broader strategy… not because time ran out.
BROKER’S FINAL THOUGHT
When a fixed rate expires, the biggest cost is rarely the new interest rate itself. The biggest cost is delay, inaction and loss of leverage.
Engaging early gives you options, options reduce stress, and reduced stress usually leads to better decisions.
If your fixed rate’s expiring in the next six months, now is the time to start talking to a WealthHealth mortgage broker - not when the rate has already rolled over.
YOU MIGHT ALSO LIKE:
• What are Swap Rates?
• What the heck’s happening with interest rates?
• Paying a mortgage off faster (for realists)
Our blog is not intended to be taken as personal advice
and is for informational purposes only.
Before acting on this information, contact WealthHealth mortgage brokers
to ensure it is suitable for your circumstances.