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Fixed Vs Variable: Should I Fix My Home Loan in 2026?
After dropping and holding steady through 2025, the RBA lifted the cash rate three times between February and May 2026. This took it from 3.60% to 4.35%. Three rises in five months is enough to make any borrower nervous! The board’s pause at its June meeting hasn’t settled things either. It left the door open to another move in August. For borrowers watching repayments climb, or anyone considering fixed versus variable before the next RBA meeting, the timing of this question couldn’t be more relevant.
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 4.35% as of June 2026, and the major banks genuinely disagree about what comes next. That disagreement matters, because it tells you even the economists paid to forecast this can’t agree on a direction. Westpac still expects two more hikes by spring. CBA expects the RBA to hold steady well into 2027. NAB has dropped its hike call altogether and now expects the next move to be a cut, though it won’t put a date on it.
Inflation explains some of the uncertainty. Headline inflation eased in April, but the RBA’s preferred measure, the trimmed mean, actually ticked up. Add a softening jobs market and an oil price spike tied to the conflict in the Middle East, and you’ve got a Reserve Bank reading a genuinely mixed set of signals. That backdrop is also why fixed and variable rates are sitting closer together than they have in years, which changes the usual calculations around fixing.
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 three hikes in five months, 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, your serviceability is already stretched, and you’re confident you won’t need to break the loan early through selling, refinancing, or paying down more than your 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
Variable rates currently sit close to, and in most cases below, fixed rates, which removes one of the usual reasons to fix. Staying variable also keeps full access to offset accounts, redraw, and unlimited extra repayments, features most fixed loans either cap or remove entirely. If the August hike some banks are still forecasting doesn’t land, you ride any future cuts down without paying a cent to switch.
Most homeowners are leaning this way in 2026, choosing to absorb the swings rather than lock anything in. That’s not a reason to follow the crowd on its own, but it does show plenty of borrowers are still rating flexibility above certainty, even after three increases this year.
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 that half, while the 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.
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.
Need some help?
Not sure where to start? That’s exactly what we’re here for. Drop us a message and we will get back to you within one business day with clear, honest advice tailored to your situation.
