Should I fix my rate?
It’s one of the most common questions we get asked — and one of the few where the honest answer is genuinely “it depends.” Fixing your rate isn’t about predicting the future perfectly; it’s about deciding what trade-off suits your situation. Here’s how to think it through properly.
What Fixing Actually Buys You
A fixed rate locks in your interest rate for a set period — typically one to five years — meaning your repayments stay the same regardless of what the Reserve Bank does with the cash rate during that window. It’s certainty, not necessarily a lower cost.
A variable rate moves with the market. When the RBA changes the cash rate, your lender typically follows within weeks, adjusting your repayments up or down accordingly.
Where Rates Sit Right Now
As a general guide, the RBA has been in a tightening cycle through 2026, having lifted the cash rate through the year in response to persistent inflation, partly linked to global energy cost pressures. This is a meaningfully different environment from the rate-cutting period of 2025, and it’s exactly the kind of backdrop that makes the fix-or-float decision worth a proper conversation rather than a guess — because where rates go from here is genuinely uncertain, and anyone who tells you they know for certain isn’t being straight with you.
The Case for Fixing
Budget certainty. If you’re stretched on serviceability, or simply value knowing exactly what you’ll pay each month, fixing removes that variable entirely.
Protection in a rising-rate environment. If you believe rates are more likely to rise further than fall over your fixed term, locking in can protect you from those increases.
Useful during major life changes. Starting a family, changing jobs, or taking on other financial commitments are all situations where predictable repayments have real value beyond the pure interest-rate math.
The Case for Staying Variable
Flexibility. Most fixed loans restrict extra repayments (often capped at $10,000–$30,000 a year before break costs apply) and generally don’t offer a 100% offset account. Variable loans are usually far more flexible on both fronts.
No break costs. If your circumstances change — you want to sell, refinance, or make a lump sum payment — a variable loan lets you do that freely. Breaking a fixed loan early can trigger a break cost, which is calculated by the lender and can be substantial depending on how rates have moved.
You benefit immediately from rate cuts. If the cycle turns and rates start falling, variable borrowers see the benefit straight away; fixed borrowers don’t, until their term ends.
The Middle Ground: Splitting Your Loan
You don’t have to choose one or the other. A split loan — part fixed, part variable — lets you lock in certainty on a portion of your debt while retaining flexibility (and offset benefits) on the rest. This is a genuinely popular strategy in uncertain rate environments like the current one, because it hedges your bets rather than betting everything on a single outcome.
Questions Worth Asking Yourself
How would a $200–$400 a month repayment increase affect my budget, if I stayed variable and rates kept rising?
Am I planning any major extra repayments, a sale, or a refinance in the next 1–3 years?
Do I value an offset account more than the certainty of a fixed rate?
Am I comfortable not benefiting immediately if rates fall during my fixed term?
This Decision Deserves a Real Conversation
There’s no universally “right” answer here — only the right answer for your situation, your risk tolerance, and what’s happening with rates at the time you’re deciding. We monitor rate movements and lender offers across our full panel, and we’ll talk you through the actual numbers for your loan, not just general commentary.
Get Started and let’s work out the right structure for you.
This article is general information only, current as at the time of writing, and does not take into account your personal financial situation, needs or objectives. It is not personal financial or credit advice, and it does not constitute a prediction or guarantee of future interest rate movements. Interest rates, cash rate settings and lender offers change regularly — always confirm current rates with your broker before making a decision. The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only. Spitfire Finance Pty Ltd ABN 70 700 362 956, ACN 700 362 956 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.