The short answer

There’s no single correct answer, and anyone who gives you one without knowing your specific situation isn’t giving you proper guidance – they’re just adding to the noise. It’s more useful to consider a framework for thinking through the decision based on your actual circumstances. That’s what this article is.

What’s happening with rates right now

The RBA lifted the cash rate to 4.60% at its September meeting, following three consecutive 25-basis-point rises in February, March and May and then holding in July and August. The next decision is at the November 2026 meeting, and economists are split: some expect another rise, most expect a hold. Nobody has a clear read.

Unfortunately, this uncertainty is the context in which you’re making your decision on whether to go with fixed or variable. Keep in mind that the choice between fixing and staying variable isn’t purely a bet on what the RBA does next – it’s a decision about what kind of certainty your household needs, and what that certainty costs.

What a fixed rate gives you

A fixed rate locks your repayment for a set period, typically one to five years. It doesn’t lock in the cheapest available rate – almost always, the fixed rate is a premium over the current variable rate, because the lender is pricing the risk of rates moving against them during the fixed term.

Right now, one-year fixed rates from most lenders are sitting broadly in line with the best variable rates, sometimes fractionally above, sometimes below, depending on the lender. Two and three-year fixed rates are priced higher than the current variable rate, reflecting lender expectations that rates will eventually ease, not rise too much further.

What this tells us is that the fixed rate you’re being offered already has the market’s expectation of future rate movements baked into it. You’re not secretly getting ahead of the bank. You’re agreeing to a trade: certainty in exchange for a premium, or a slight discount, depending on the term.

What a fixed rate costs you

This is the part that surprises people most, and it’s worth sitting with before you commit.

Once you’re fixed, you’re fixed. Breaking a fixed-rate loan before the term ends involves break costs, which your lender calculates based on current wholesale market rates. These can be negligible or genuinely expensive – there’s no way to know in advance exactly what they’ll be, because they depend on where rates are at the time you want to exit, not where they are today.

Fixed rates also typically come with restrictions that variable loans don’t: limits on additional repayments, no access to an offset account, or reduced functionality. A homeowner planning to drop a work bonus or an inheritance onto the mortgage, or who wants the flexibility of an offset, may find those restrictions costly in ways that don’t show up in the interest rate comparison.

What a variable rate gives you

A variable rate moves with the market, for better and for worse. The rate can rise – as it has three times this year – but it can also fall. The flexibility of making extra repayments, using an offset account, and refinancing without break costs is genuine, and for many households it’s worth more than any premium a fixed rate offers.

The cost of staying variable is uncertainty in your monthly repayments. That cost isn’t the same for every household. A family running a tight budget in Lismore after four rate rises this year experiences that uncertainty differently to a dual income household with a comfortable buffer. That’s not a value judgement – it’s why the decision is personal rather than universal.

The case for splitting your loan

A split loan – part fixed, part variable – is often less a compromise and more a genuinely useful structure for households that want some repayment certainty without losing the flexibility of their offset account or the ability to make extra repayments.

The split ratio can be anything. There’s no rule that says it has to be 50/50. A homeowner who wants certainty on most of their mortgage but wants to keep a portion variable so their offset account remains useful might fix 60–70% and leave 30–40% variable. Structuring it this way means a future RBA cut benefits the variable portion, while the fixed portion is insulated from another rise.

It also keeps refinancing options partially open. If you’re fully fixed and decide in 12 months that you’d rather be elsewhere, break costs apply to the whole balance. On a split structure, break costs only apply to the fixed portion.

The question that drives the decision

Before you think about rates or percentages, answer this: if the RBA raises again in August, and your variable repayments increase by another $70 to $90 a month, does that genuinely stress your household budget –or is it uncomfortable but manageable?

If the honest answer is that another rise would meaningfully hurt, a fixed rate – or a partial fix – gives you something real: the ability to plan and budget without a monthly variable hanging over the household. That’s worth the premium.

If the answer is that you can absorb it, and you’d rather keep your offset account operational and your options open, staying variable and doing nothing is a completely reasonable position.

Neither answer is wrong. Both just need to be arrived at deliberately rather than by default.

A note on timing

One thing that rarely gets said clearly: most people who agonise over whether to fix or stay variable are doing so while their existing rate sits well above what’s currently available to them anyway. The more pressing decision, for many Northern Rivers homeowners right now, is whether to refinance at all – to a more competitive rate, whether fixed or variable – rather than which rate type to then sit in.

Which loan type suits your life is a different aspect to weigh up compared to whether your current loan is still competitive.

Frequently asked questions

Are fixed rates lower than variable rates in mid-2026?

Broadly speaking, one-year fixed rates are close to current competitive variable rates. Two and three-year fixed rates are generally priced above the best variable rates available, reflecting lender expectations about the rate cycle.

What are break costs on a fixed-rate loan?

The fee charged for exiting a fixed rate before the term ends. The amount is calculated by your lender based on current wholesale rates and can be significant – it’s not predictable in advance, which is why it’s one of the main risks of fixing.

Can I have an offset account with a fixed-rate loan?

Most lenders don’t offer a true offset account on fixed-rate loans, or restrict how much offset is available. If your offset account is an important part of how you manage cash flow, this is a genuine trade-off worth weighing.

What’s a split loan?

A home loan where part of the balance is on a fixed rate and part is on a variable rate. The split ratio can be tailored. It allows borrowers to maintain some repayment certainty while keeping the flexibility of a variable component, including access to an offset account on the variable portion.

Should I fix my home loan before the August RBA meeting?

That depends on your household’s actual financial position and flexibility, not on predicting the RBA’s decision. The right framing is whether your repayment budget needs certainty, not whether you can outguess the Reserve Bank.

Want to work through the numbers for your specific loan?

A Loan Health Check compares your current rate against what’s actually available – fixed, variable and split options – and gives you a clear picture of the trade offs for your situation.

This article contains general information only and doesn’t take into account your personal financial situation, needs or objectives. Interest rate references are indicative of the market at the time of writing and will change. Speak with a Smik Home Loans broker for advice tailored to your circumstances before making any lending decisions.