Fixed or Variable When Rates Are Still Rising?

When rates are rising, fixing sounds like the obvious defensive move. The catch is that lenders know rates are rising too, and they price fixed loans accordingly. With the cash rate at 4.85%, here is how the choice actually looks.

How do fixed and variable rates compare now?

Fixed rates offer little or no discount to competitive variable rates. Money.com.au’s lowest listed fixed rates sit at 6.39% for one to three years and 6.49% for four and five years (Money.com.au, 2026). After the November rise, Canstar expected more than 40 lenders to offer variable rates below 6.5%, with a few below 6.2% (Martin, 2026).

Borrowers have noticed. In refinance enquiries between April and September 2026, only 8.2% were for fixed loans, compared with 90.4% for variable (Money.com.au, 2026).

Why aren’t fixed rates cheaper?

A fixed rate is a lender’s bet on where rates are heading. Lenders typically charge more for fixed loans when they expect rate rises (Money.com.au, 2026). They also lifted fixed rates well ahead of the RBA in 2026. By January, 54 lenders had raised at least one fixed rate in anticipation of a higher cash rate (Williamson, 2026).

When you fix now, you are paying a price that already assumes some further rises.

What do you gain by fixing?

Certainty. Your repayments stay the same for the fixed term, whatever the RBA does. With ANZ seeing a material risk of a 5.10% cash rate by February (Kane, 2026), that certainty has real value if your budget is tight.

What do you give up?

Flexibility. Fixed loans often limit extra repayments and may only offer a partial offset or limited redraw (Home Loan Experts, 2025).

The benefit of future cuts. CBA has pencilled in cuts for August and November 2027 (Kane, 2026). If those arrive, a borrower fixed for three years keeps paying the higher rate.

Freedom to exit. Breaking a fixed loan early generally triggers break costs, which can run from hundreds to thousands of dollars. Bankwest’s own example estimates around $15,000 on a $300,000 loan with two years remaining (Money.com.au, 2026). Selling, refinancing or restructuring during the term can trigger them.

A good rate at the end. When the fixed term ends, the loan usually rolls to the lender’s standard variable rate. Diarise the end date and review your options before it arrives.

Is a split loan the answer?

For many borrowers, it is a sensible middle ground. A split loan divides the balance into fixed and variable portions, such as 50/50 or 60/40 (Home Loan Experts, 2025). You get certainty on part of the debt, while the variable portion keeps the offset and extra repayment features. The trade-off is that each portion carries the downsides of its own type.

Fixed or variable: who suits which?

Variable may suit you if:

• you expect to sell, refinance or restructure within the next few years
• you hold meaningful cash in an offset account
• you can absorb another one or two rate rises.

Fixing may suit you if:

• your budget cannot absorb further rises
• you value certainty above the chance of benefiting from future cuts
• you are confident you will keep the loan for the full term.

A note for investors. Interest on an investment loan is generally deductible whether fixed or variable, but break costs and restricted offsets can disrupt portfolio plans. If you expect to buy, sell or refinance within the term, flexibility usually matters more.

Frequently asked questions

Should I fix my home loan in November 2026? It depends on your budget and plans. Fixed rates currently offer little discount to competitive variable rates, so you are mainly paying for certainty.

What are break costs on a fixed loan? Fees charged when you repay or change a fixed loan before its term ends, which compensate the lender for lost interest.

This article is general information only and does not consider your personal circumstances. Speak to a licensed credit adviser before choosing a loan.