In mid-2021 you could fix a home loan at 1.94 per cent for two years, and roughly 38 per cent of new lending did exactly that. Those terms are now expiring in waves across 2026. The moment your fixed period ends, CBA, Westpac, NAB and ANZ do not move you to their sharpest variable. They drop you onto the carded standard variable rate, the revert rate, which right now sits near 6.3 to 6.6 per cent. That is not a rounding error. On a typical loan it roughly doubles your monthly interest, and the bank sends one letter about it and then waits to see if you read it.
I have sat across the kitchen table from people who genuinely thought the revert rate was some neutral fallback set by the regulator. It is not. It is the highest variable the lender publishes, the number they quietly bank on you ignoring. The good news is that the cliff is on a calendar you can see months out, and the fix is a phone call and a comparison, not a leap of faith.
What the revert rate actually costs you
Take a $600,000 loan that was fixed at 2.19 per cent. At that rate the interest component alone runs about $1,095 a month. Roll onto a 6.5 per cent revert rate and the interest jumps to roughly $3,250 a month. That is an extra $2,155 a month, or close to $25,860 a year, on interest alone, before you touch the principal. Now scale it to $750,000: interest of about $1,369 a month at 2.19 per cent becomes about $4,063 a month at 6.5 per cent, an extra $2,694 a month or just over $32,300 a year.
The cruel part is that the same lender will very often write you a new variable at 6.1 to 6.3 per cent if you simply ask. On that $750,000 loan, the gap between the 6.5 per cent revert rate and a 6.15 per cent negotiated variable is about $219 a month, roughly $2,630 a year, for the same loan at the same bank. That gap is the loyalty tax, and it is paid entirely by the people who do nothing.
The 60-days-out playbook
The bank will not proactively hand you its best rate. You have to make it compete, either against itself or against the lender down the road. Here is the sequence that works, starting two months before your fixed term ends.
- Diarise your fixed-expiry date minus 60 days. That is the day you start, not the week it reverts.
- Call your bank and make a retention request. Ask, in writing, for the best variable rate they will offer to keep you, and get the number and the comparison rate emailed to you.
- In parallel, get a refinance quote from at least two other lenders so you have a real outside offer, not a bluff.
- Compare on the comparison rate, not the headline, so annual fees and offset costs are in the picture.
- If the outside offer is sharper, take the discharge quote back to your bank or just switch. Lenders match far faster when they can see a competing approval.
A retention call is the lazy win when your existing bank is competitive and your situation has not changed. A full refinance is the bigger lever when another lender is 30 to 50 basis points cheaper and you can pass their assessment. Both beat doing nothing by thousands a year.
Why some borrowers are now mortgage prisoners
Refinancing only works if you can pass another lender's assessment, and that is where 2026 bites. APRA's serviceability buffer is still 3 per cent, so a new lender tests you at around 9.3 per cent, not the 6.3 per cent you would actually pay. Households that borrowed near their limit in 2021, when they were assessed against a 2 to 3 per cent rate, often cannot clear a 9.3 per cent test today, especially after their living costs rose. They are mortgage prisoners: stuck because no new lender will take them, even though their existing repayments are current.
If that is you, the move is not to give up, it is to negotiate hard with your existing bank, who can reprice you without re-running the full serviceability test because you are not a new applicant. There is one more lever worth protecting: if your loan is at or below 80 per cent of the property value, refinancing avoids lender's mortgage insurance entirely. Rising prices may have pushed you under 80 per cent LVR since 2021 even if you have not paid down much, which can quietly reopen the refinance door that was shut when you first borrowed. Diarise the date 60 days out, make the retention call, get two outside quotes, and decide on the comparison rate.
Disclosure: Your Finance Guide partners with Australian Lending and Investment Centre (ALG) ACL 505575 for broker matching, and ALG receives lender commissions on settled loans. We are not your lender and we do not set the revert rate; our interest is in getting you off it and onto a sharper one, which is the same outcome you want.