Fixed or variable home loan in 2026?

After four RBA rises in 2026, many borrowers want the certainty of a fixed rate. But lenders have already priced further rises into their fixed rates, lifting hundreds of them since the September decision. Here is how to weigh it up. Compare repayments at different rates in the repayment calculator.

Where rates are now

• Cash rate: 4.60% since 29 September 2026. Next decision 3 November 2026.
• Average variable rate (owner-occupier, principal and interest): 6.75% on Canstar’s database in mid-October.
• Lowest variable rate: 5.69%, expected to rise to about 5.94% once all lenders pass on the September rise.
• Fixed rates: all above 6%. In one week in October, 21 lenders lifted 510 fixed rates by an average of 0.21 points.
• The gap: each lender’s lowest fixed rate is on average about 0.34 points above its lowest variable rate.

A two-year comparison

Take a $600,000 loan over 30 years. Suppose the best variable rate on offer is 6.25% and a two-year fixed rate is 6.59%, a typical 0.34 point gap.

Scenario over the next two years	Interest paid	Better choice
Fixed at 6.59%	$78,239	Benchmark
Variable, no further changes	$74,149	Variable by $4,090
Variable, one 0.25 rise next month	$77,028	Variable by $1,211
Variable, two 0.25 rises within six months	$79,269	Fixed by $1,030
Variable, a 0.25 cut after ten months	$72,415	Variable by $5,824

Fixing is essentially a bet that rates will rise by more than the lender has already built into its fixed rate. Right now that means more than one further rise, fairly soon.

Reasons to choose fixed

• You need certainty. A fixed repayment makes budgeting easier if your income is tight.
• You expect several more rate rises and want protection.
• You don’t plan to make big extra repayments or sell in the fixed period.

Reasons to choose variable

• It is currently cheaper at almost every lender.
• You can make unlimited extra repayments and usually have an offset account.
• No break costs if you sell, refinance or pay the loan off early.
• You benefit straight away when rates eventually fall.

The middle option: split your loan

Many lenders let you fix part of your loan and keep the rest variable. For example, fixing half of a $600,000 loan gives you certainty on $300,000 while keeping an offset and extra repayments on the other $300,000. It limits both the risk and the reward.

Watch for these traps

• Break costs: leaving a fixed loan early can cost thousands if rates have fallen since you fixed.
• Extra repayment caps: many fixed loans limit extra repayments to around $10,000 to $30,000 a year.
• Revert rates: when a fixed period ends, you roll onto the lender’s standard variable rate, which is often well above its best rates. Ask for a better rate before it ends, using our script for asking your bank, or check whether refinancing is worth it.
• Rate lock fees: a fixed rate can change between application and settlement unless you pay to lock it.

Rates are a moving target, so compare current fixed and variable offers on homeloaninterestrates.au. To see how much rises have already cost, read how much your mortgage goes up when rates rise, and model a switch in the refinance calculator.

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