With the cash rate at 4.60% after four rises in 2026, and some economists expecting another, fixing your rate is tempting. But fixed rates have already moved up, and locking in has trade-offs.
Here's how to think it through.
How fixed rates are set
Fixed rates aren't set by the cash rate directly. They're based on what lenders expect rates to do over the fixed period. When markets expect more hikes, fixed rates rise ahead of the RBA.
That means by the time a rise is widely expected, much of it is already priced into fixed rates. Fixing only beats variable if rates rise more than the market expected.
The case for fixing
- Certainty. Your repayment won't change during the fixed term. That's valuable if your budget is tight.
- Protection from further rises. If rates keep climbing beyond expectations, you're shielded.
- Peace of mind. For some borrowers, this matters more than the dollars.
The case for variable
- Flexibility. Unlimited extra repayments, redraw and full offset accounts are standard on many variable loans.
- No break costs. You can refinance or sell without penalty.
- Rate cuts flow through. If rates fall, you benefit straight away. Some economists have flagged possible cuts in 2027, though forecasts change.
The downsides of fixing
- Break costs if you sell, refinance or pay off a large amount early. These can be thousands of dollars if rates fall after you fix.
- Limited extra repayments, often capped at $10,000 to $20,000 a year.
- Offset accounts are often not available, or only partially.
- Revert rate at the end of the term may be higher than you'd negotiate.
A middle path: split your loan
Many borrowers split their loan, for example:
- 50% fixed for 2 or 3 years for certainty
- 50% variable with an offset for flexibility
You get partial protection and keep some flexibility. Read more in split loans explained.
Questions to ask yourself
- Could I handle another 0.50% rise on variable? If not, some certainty may be wise.
- Am I likely to sell, refinance or move in the next few years? If yes, break costs could bite.
- Do I use an offset account? If you hold significant savings, losing an offset could cost more than fixing saves.
- Do I plan to make big extra repayments? Variable is usually better.
How long to fix?
Shorter fixed terms (1 to 2 years) give a little certainty without locking in for long. Longer terms (3 to 5 years) give more certainty but more risk if rates fall.
Lock in your rate
When you apply to fix, the rate isn't guaranteed until settlement or the switch date, unless you pay a rate lock fee. In a rising market, a rate lock can be worth it.
Frequently asked questions
Will fixed rates go up again?
They may, if markets expect more hikes. They can also fall if expectations change. Nobody can say for certain.
Can I switch from fixed to variable later?
Yes, but if you break a fixed term early, you may pay break costs.
What happens at the end of a fixed term?
Your loan reverts to a variable rate, often higher than what you could negotiate. Review it two to three months beforehand.
Can't decide between fixed, variable or split? Call Finfident on 0424 545 654. We'll model each option against your budget and plans.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.