Fixed vs Variable Rate: How to Choose in 2026

Should I fix my rate? It's one of the most common questions we get - and one of the hardest to answer definitively, because it depends on your personal circumstances, risk tolerance, and views on where rates are heading.

In 2026, with the RBA having cut rates multiple times from the 2023 peak, the decision is particularly nuanced. Variable rates have fallen, but fixed rates are priced based on where lenders expect rates to go - which means they're not always the bargain they appear.

Here's a clear framework to help you decide.

A variable rate moves with the market. When the RBA cuts the cash rate, variable rates typically fall. When the RBA raises rates, variable rates rise. Your repayments change accordingly.

Advantages of variable rates:

• ✓Full flexibility - make unlimited extra repayments without penalty
• ✓Access to offset accounts, which can significantly reduce your interest
• ✓Benefit immediately when rates fall
• ✓No break costs if you refinance or sell
• ✓Usually the lowest rate available at any given time (in a falling rate environment)

Disadvantages of variable rates:

• ✗Repayments can increase if rates rise - harder to budget
• ✗Uncertainty can cause anxiety for some borrowers

A fixed rate is locked in for a set period - typically 1, 2, 3, or 5 years. Your repayments don't change during the fixed term, regardless of what the RBA does.

Advantages of fixed rates:

• ✓Certainty - you know exactly what your repayments will be
• ✓Protection if rates rise during your fixed term
• ✓Easier to budget, especially for first home buyers

Disadvantages of fixed rates:

• ✗Break costs can be significant if you refinance, sell, or make large extra repayments during the fixed term
• ✗Usually no offset account (or limited offset)
• ✗Extra repayments are typically capped (often $10,000/year)
• ✗If rates fall, you're stuck on the higher fixed rate
• ✗Fixed rates are priced based on future rate expectations - they're not always cheaper than variable

After a series of RBA rate cuts in 2024–2025, variable rates have fallen from their 2023 peak. As of early 2026, competitive variable rates for owner-occupiers are available below 6.00% p.a. from multiple lenders.

Fixed rates are currently priced to reflect market expectations of where rates will be over the fixed term. In a falling rate environment, fixed rates are often higher than variable rates - because lenders are pricing in the expectation that variable rates will continue to fall.

Note: This is general commentary, not personal financial advice. Your situation may differ. Speak with us to get a recommendation specific to your circumstances.

A split loan divides your mortgage into two portions: one on a fixed rate and one on a variable rate. For example, you might fix 60% of your loan and keep 40% variable.

This gives you:

• ✓Certainty on the fixed portion - you know what those repayments will be
• ✓Flexibility on the variable portion - you can make extra repayments and use an offset account
• ✓Partial protection if rates rise
• ✓Partial benefit if rates fall

A split loan is a popular choice for borrowers who want some certainty without giving up all flexibility. We'll help you determine the right split ratio based on your goals and cash flow.