A borrower who fixed $600,000 in late 2023 at a rate in the low fives has a fixed term ending in December. The loan has been quietly doing its job for three years. In the same three years the cash rate has moved several times, and the five rises of 2026 alone have added 1.25 percentage points, with the most recent taking the cash rate to 4.85% on 3 November and most lenders moving variable rates between 13 and 19 November.
Nothing about this borrower’s file has changed. What changes in December is the rate the loan is priced at, and that is where three quite different paths open up. We often see people treat them as one question, “what rate can I get”, when they are three processes with three different assessments behind them.
The scenario
Balance at expiry: roughly $575,000, with about 27 years left on the term. Repayments on the fixed rate of 5.49% have been about $3,405 a month.
The figures below are illustrative and use rates in the range lenders have published after the November round, so the point is the gap between the three paths rather than any particular number.
Path one: do nothing and revert
Every fixed loan has a revert rate written into the contract. It is usually the lender’s standard variable reference rate less a modest discount, and in most cases it is higher than the rate the same lender offers to a new customer that week.
If the revert rate lands at 7.14%, the repayment on this loan becomes about $4,005 a month, roughly $600 more than the fixed repayment. No application, no assessment, no paperwork. It simply happens on the expiry date.
What most people don’t realise until they are in this situation is that the revert rate is not a penalty and not a mistake. It is the default position of a contract written three years ago, and it is the figure a borrower ends up on when nobody asks a question.
Path two: ask the existing lender to reprice
A repricing request asks the current lender to apply a larger discount to the reference rate on the existing loan. The loan does not change. The security does not change. The borrower’s income is not reassessed, and the loan is not re-run through a serviceability calculator at the current assessment rate plus the 3% buffer.
That last point is the one that matters most this year. Equifax reported in its September figures that refinancing with the same lender fell 28% over the year and switching to another lender fell 8.8%, with serviceability settings described as holding borrowers in place. A repricing request sits outside that gate entirely.
If the lender reprices to 6.74%, close to the average owner-occupier variable rate expected after this round, the repayment is about $3,855 a month. That is around $150 a month less than the revert figure, on the same loan, with the same lender, after a request that typically takes a few days.
Lenders do not reprice automatically, and the discount offered depends on the loan size, the loan-to-value ratio, the product and what the same lender is offering new customers at the time. It is a commercial decision, not an assessment decision.
Path three: refinance to another lender
A refinance is a new loan application. The new lender orders a valuation, verifies income and expenses, and tests the loan at its own variable rate plus the APRA serviceability buffer of 3%. A loan written at 6.49% is assessed as if the rate were 9.49%, which on this balance means demonstrating capacity for a repayment of about $4,925 a month, even though the actual repayment would be about $3,765.
Some lenders apply a 1% buffer for a like-for-like refinance, where the loan size is not increasing and the borrower has a clean repayment history. Where it is offered, it narrows the gap between what the borrower pays and what the borrower is tested on, but it is a lender policy setting rather than a general rule, and it comes with its own conditions.
If the file passes, the result is the lowest repayment of the three. If capacity has tightened since 2023, which for many households it has, the refinance may not pass even though the borrower has made every repayment on time. The repayment history is not what is being assessed. Capacity at today’s assessment rate is.
The three figures side by side
On the same $575,000 balance over the same 27 years:
- Revert at 7.14%: about $4,005 a month
- Repriced at 6.74%: about $3,855 a month
- Refinanced at 6.49%: about $3,765 a month
The spread between the first and the third is about $240 a month. The spread between the first and the second, the path that needs no assessment at all, is about $150 a month.
What mattered
The outcome in this case came down to sequencing. The repricing request was made before the expiry date, so the borrower did not spend a month on the revert rate. The refinance was then assessed as a separate question, with a clear picture of what it would need to beat and whether the file would support it at the current assessment rate.
In situations like this, what typically matters is understanding that the revert rate is a default, the reprice is a request, and the refinance is an application. Only the third is tested, and only the first happens without anyone acting.
Understanding how this is assessed before you apply puts you in a better position.
If your fixed term is ending in the next few months, you can book a time to talk it through here.