Should You Fix Your Home Loan Rate in 2026?

A variable rate moves up and down as your lender adjusts pricing, usually in response to RBA cash rate changes and funding costs. A fixed rate locks your rate (and therefore your repayment) for a set period, typically 1, 2, 3, or 5 years. Key differences: • Variable: rate and repayments can move; usually comes with an offset account; allows unlimited extra repayments without penalty; easier to refinance or sell • Fixed: rate and repayments are locked; often no offset, or a partial offset only; extra repayments capped (commonly $10,000 to $30,000 per year over the contracted repayment); break costs apply if you exit early In April 2026, after the rate-cut cycle that began in 2024, most major lenders offer fixed rates that are broadly similar to or slightly below their headline variable rates, depending on term. The exact gap moves week to week and varies between lenders.

Fixing a portion or all of your loan tends to make sense when: • Budget certainty is critical (single income, growing family, tight cashflow) • Fixed rates are demonstrably below variable rates by a meaningful margin (0.30% or more) • You have no plans to sell or refinance during the fixed term • You do not need a full-feature offset account • You believe rates are more likely to rise than fall during your fixed term Be honest with yourself about the second and third points. The 2021–2023 cohort of fixed-rate borrowers learned this hard lesson when ultra-low fixed rates rolled off into a much higher variable environment, sometimes with break costs they had not budgeted for.

Avoid fixing when: • You expect to sell or refinance within the fixed term (break costs can be tens of thousands of dollars on larger loans, though they are formula-based and depend on rate movement) • You rely heavily on an offset account to park savings, salary, or business income (most fixed loans have no offset) • You plan large extra repayments to pay down the loan quickly (extra repayment caps will frustrate you) • Your income is variable and you may need redraw flexibility • Fixed rates are clearly above variable, which removes the certainty premium that justifies giving up flexibility A common mistake is to fix because of headline news about rates, without checking your actual scenario. The decision should be driven by your loan, your cashflow, and the specific rates on offer to you, not by media commentary.

Most borrowers who want some certainty without giving up flexibility choose a split loan: part of the loan is fixed, part is variable. A common structure on a $600,000 loan might be: • $400,000 fixed for 2 or 3 years (locks in two-thirds of the repayment) • $200,000 variable with an offset account (lets you park savings, salary, and emergency funds) This structure gives you certainty on most of your repayment, full offset benefit on the variable portion, and easier refinance optionality (you can refinance the variable side any time, and the fixed side rolls off naturally). The only downside is two account structures to manage, but most banks present this as a single loan with sub-accounts, so it is invisible day-to-day. Before committing, ask your broker to model the dollar outcome at three rate scenarios (rates fall 0.50%, rates flat, rates rise 0.50%) so you can see the trade-off in real numbers, not theory.

This is general information only, not personal credit advice. Your actual options depend on your full financial picture, including your income, deposit, credit profile, and the specific loan structure you need. Speak with a licensed broker for advice tailored to your situation.