Please note: this article was first published in June 2026 and updated on 1 October 2026 following the RBA’s September decision. Interest rates and lender policies may have changed since, so contact us for the latest information.
After three cuts in 2025 brought the cash rate down to 3.60%, the RBA has reversed course in 2026. It lifted the cash rate three times between February and May, held at 4.35% in June and August, then raised it again on 29 September to 4.60%. That’s four rises in one year and the highest cash rate in about 15 years. For borrowers watching repayments climb, the question of fixed versus variable has rarely felt more pressing.
The fixed vs variable home loan decision in 2026 doesn’t have one correct answer. It depends on your situation, your timeline, and how much certainty you actually need. Here’s how to think it through properly.
Where Rates Actually Sit Right Now
The cash rate sits at 4.60% as of October 2026. The two holds in June and August showed the RBA is willing to pause and watch the data, while the September rise showed it is still prepared to move when inflation doesn’t come down fast enough. For the detail on that decision, see our breakdown of the September 2026 rate rise.
As for what comes next, economists’ forecasts differ and they change from month to month. That in itself is useful information: if the people paid to predict rates can’t agree on a direction, you shouldn’t base a multi-year decision on a single forecast either. A better approach is to compare the fixed rate actually on offer against your current variable rate, and ask what your repayments would look like if variable rates rose further from here. Lenders already test your application with a buffer above the actual rate, which gives you a rough sense of how much headroom you have.
The Case for Fixing
A fixed-rate loan provides certainty by locking in both your interest rate and repayments for an agreed term, regardless of future RBA decisions. After four hikes in one year, plenty of borrowers want their budget to stop moving, and fixing delivers exactly that.
This approach is generally best suited to borrowers who believe rates are more likely to rise than fall from here, whose serviceability is already stretched, and who are confident they won’t need to break the loan early through selling, refinancing, or paying down more than their annual extra repayment cap.
That last condition matters more than most borrowers expect. Break costs on a fixed loan are calculated against the gap between your locked rate and the lender’s current rate for the remaining term, and they can run into the thousands of dollars. Lock in for three years and rates fall well before that, and you carry the difference.
The Case for Staying Variable
Staying variable keeps full access to offset accounts, redraw, and unlimited extra repayments, features most fixed loans either cap or remove entirely. If rates stabilise or eventually come down, you benefit straight away without paying a cent to switch. The trade-off is that you carry the risk of further rises, so it suits borrowers who have room in their budget to absorb another increase.
Whether staying variable makes sense also depends on the gap between the fixed rates on offer and your current variable rate. That gap changes as lenders reprice, so check it at the time you’re deciding rather than relying on what was true a few months ago.
The Middle Ground: Splitting the Loan
A split loan, where you fix a portion and leave the rest variable, lets you hedge instead of picking a side outright. Fix half your loan, and a further rate rise only bites on the variable half, while that variable portion still gives you an offset account and extra repayment flexibility. You give up some upside if rates fall and some certainty if they rise, but for borrowers who genuinely can’t decide, it’s the structure worth considering first.
What Matters More Than the Headline Rate
- How long you’ll keep the loan or the property. Fixing for five years when you might sell in two is a poor match.
- Whether you’ll need redraw, offset, or extra repayments during the fixed term.
- Your appetite for certainty versus your appetite to catch a future rate cut.
- The comparison rate, not just the headline rate, once fees are factored in.
- How your current lender’s offer stacks up against the market. Dozens of lenders are actively competing for your business right now. The gap between the best and worst rate for an equivalent loan can be significant.
How to Make the Call
Borrowers seeking certainty, stable repayments, and protection against further rate rises may find fixing all or part of their loan appropriate. On the other hand, those who value flexibility, expect rates to stabilise, or want unrestricted access to features such as offset and redraw may be better served by remaining variable.
For many households, the answer sits somewhere in between. A split loan can reduce risk without requiring a strong view on where rates are heading next.
If you’re already on a fixed rate that’s about to expire, the decision looks a little different. Our guide to your options when a fixed rate ends covers what to do before you roll onto your lender’s revert rate.
Talk It Through Before You Decide
Every borrower’s situation is different, and the right call depends on your loan size, your timeline, and how the rest of your finances are structured. At Ingram Financial, we compare options across dozens of lenders and walk you through exactly what fixing, staying variable, or splitting would mean for your repayments, not just today, but over the life of the term.
If you’re weighing this decision, get in touch and we’ll run the numbers for your situation.
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, fees and charges apply. Consider whether it is appropriate for you and speak to us for advice specific to your situation.
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