The RBA has raised the cash rate twice already this year – and economists at two of the big four banks are tipping another hike in May. It’s no surprise that one question keeps coming up in broker conversations right now: should I fix my rate?
It’s a reasonable question. When rates are rising, locking in a fixed rate can feel like the smart, protective move. But the answer is rarely that simple. Whether fixing makes sense depends entirely on your situation, your loan, and what you’re trying to achieve. This article won’t tell you what to do – that’s a conversation worth having with your broker – but it will give you an honest picture of what fixing actually means, so you can make an informed decision.
What does it mean to fix your home loan rate?
A fixed rate home loan locks your interest rate for a set period – typically one to five years. During that time, your repayments stay the same regardless of what the RBA does with the cash rate. When the fixed term ends, your loan rolls onto your lender’s standard variable rate (unless you refix or refinance).
Fixed rates are priced by lenders based on their expectations of where rates are heading, not just where they are today. That’s an important distinction. If lenders expect rates to rise, they generally build that into their fixed rate pricing – which is why fixed rates have been climbing in recent months alongside cash rate expectations.
Right now, the RBA cash rate sits at 4.10% following two consecutive hikes in 2026. The average rate for a new owner-occupier home loan has moved to around 5.75% p.a. as a result. Competitive fixed rates are sitting broadly on par with variable rates – in or above the mid-5% range – which means fixing doesn’t automatically give you a lower rate than you’re paying today.
What are the advantages of fixing your rate?
The main benefit of a fixed rate is certainty. You know exactly what your repayments will be for the length of your fixed term, no matter what happens with rates.
This matters most when:
- Your budget is tight. If a rate rise of 0.25% would genuinely put pressure on your monthly cash flow, knowing your repayments won’t change provides real peace of mind.
- You’re planning around a fixed income. If your household income is stable and predictable, a fixed repayment can make budgeting easier over the fixed term.
- You have a specific timeline. If you’re planning to sell, renovate, or refinance within the next few years, a short-term fixed rate (one to two years) can give you stability during that window.
- Rates are expected to rise further. If rates do continue to increase during your fixed period, you’re protected from those additional movements.
According to research by Money.com.au, around 9% of borrowers are currently planning to split their loan between fixed and variable as a hedge against rate uncertainty – a strategy that captures some of the certainty benefits without going all-in on either approach.
What are the disadvantages of fixing your rate?
Fixing your rate comes with trade-offs. The most significant is that you give up flexibility – and in some scenarios, you can end up paying more than borrowers who stayed variable.
The main drawbacks include:
- Break costs if you exit early. If you need to sell, refinance, or pay off your loan during the fixed term, your lender can charge a break cost – sometimes a significant one. Break costs apply to fixed rate loans only, and the amount depends on how far rates have moved since you fixed. We’ve written more about how break costs are calculated in our article on what it really costs to leave your fixed rate early.
- Limited extra repayments. Most fixed rate loans cap the extra repayments you can make – commonly $10,000 to $20,000 per year. If you want to pay down your loan faster, a fixed rate can restrict that.
- No offset account. Fixed rate loans rarely come with a 100% offset account. If you hold savings in an offset to reduce your interest, you’d lose that benefit on any portion you fix.
- If rates fall, you’re locked in. The cash rate is not on a one-way track. If inflation eases and the RBA cuts rates during your fixed term, variable rate borrowers benefit immediately. Fixed rate borrowers don’t.
- Fixed rates already price in expectations. Because lenders factor rate rise expectations into fixed pricing, you may find that fixing doesn’t deliver the discount you expected – especially when fixed and variable rates are broadly comparable.
Fixed vs variable: how do they compare right now?
Both options are sitting at broadly similar rates right now. That doesn’t mean one is better than the other – it means the decision comes down to what you value more: certainty or flexibility.
Is there a middle option?
A split loan lets you fix part of your home loan and leave the rest on a variable rate. This approach gives you some certainty on repayments while keeping flexibility on the variable portion.
For example, you might fix 60% of your loan to lock in a known repayment, while leaving 40% variable so you can still make extra repayments, use an offset account, and benefit if rates fall. It’s worth understanding how this works in more detail – our fixed vs variable guide covers the mechanics of split loans alongside both rate types.
The right split depends on your loan size, your cash flow, and your risk tolerance. It’s not a one-size-fits-all answer, and that’s precisely why it’s worth talking through with a broker who can look at your specific numbers.
What should you actually consider before deciding?
Before making any decision, these are the questions worth working through:
- How would another rate rise affect your repayments? Use our loan repayment calculator to run the numbers. If the RBA hikes to 4.35% in May as some economists expect, what does that add to your monthly repayments at your current loan balance?
- What are the current fixed rates on offer? Fixed rates vary significantly across lenders. The best fixed rate for your loan size, LVR, and lender relationship may be materially different from the advertised headline rate.
- Do you want to make extra repayments? If paying down your loan faster is a priority, fixing could work against you.
- Are you likely to need to sell or refinance? If your circumstances might change – new job, growing family, property upgrade – break costs could become an expensive surprise.
- Are you using an offset account? If you hold meaningful savings in an offset, those savings are actively reducing your interest charge. Losing that feature by fixing may cost more than you’d save from a rate lock.
- What’s the fixed rate premium? Compare the fixed rate you’ve been offered against the variable rate on a comparable loan. If the gap is small, you may be paying for certainty that doesn’t deliver much financial benefit – or at all.
According to research published by Money.com.au (March 2026), 56% of mortgage holders say they intend to stay on a variable rate and ride out the current volatility. That’s a majority – but it’s also not a universal conclusion. Your situation may be different.
What Borro can't tell you - and what we can
There’s a question this article deliberately doesn’t answer: will rates keep rising? That’s because nobody knows for certain – not the major banks, not the RBA, and not us. ANZ and NAB have both indicated they expect another 25-basis-point hike in May 2026. But rate forecasts have been wrong before, in both directions.
As RBA Governor Michele Bullock noted in her post-decision press conference: the board will continue to rely on the data to guide future decisions.
What we can do is help you understand the options available on your specific loan, compare the current fixed rates across our panel of 30+ lenders, and model what different scenarios look like for your repayments. That’s a different thing from telling you what rates will do – and it’s the conversation that actually leads somewhere useful.
The question of whether to fix isn’t a market timing question. It’s a personal finance question. Book a free chat with one of our brokers and we can look at your loan together.
Or if you want to start by running the numbers yourself, our calculator hub has tools for repayment estimates, refinancing comparisons, and more.
Frequently Asked Questions
That depends on your situation rather than the market. Fixed and variable rates are currently sitting at broadly similar levels, which means fixing isn’t automatically the cheaper option. The key question is whether certainty of repayments matters more to you right now than flexibility. A broker can compare the specific fixed rates available to you across 30+ lenders and help you weigh that up.
When your fixed term expires, your loan automatically rolls onto your lender’s standard variable rate – which is often higher than the most competitive variable rates available elsewhere. This is a critical moment to review your loan. You can refix with your current lender, switch to variable, split the loan, or refinance to a different lender entirely.
Most fixed rate loans allow extra repayments up to a cap – typically $10,000 to $20,000 per year. If you go over that limit, you may be charged an excess repayment fee. Variable rate loans generally allow unlimited extra repayments. If paying down your loan quickly is a priority, check the repayment conditions on any fixed rate product before committing.
Break costs are fees your lender charges if you exit a fixed rate loan before the end of your fixed term – for example, if you sell your property, refinance, or pay off the loan early. They only apply to fixed rate loans, not variable. The amount depends on how far market rates have moved since you fixed. In a rising rate environment, break costs are typically lower; in a falling rate environment, they can be substantial.
A split loan can make sense if you want some certainty on repayments while keeping flexibility on part of the loan. For example, fixing a portion protects that part of your repayment from future rate rises, while leaving the rest variable allows extra repayments, offset account access, and the ability to benefit from rate cuts. The optimal split depends on your loan size, cash flow, and goals – it’s worth talking through with your broker.
This article is general information only and does not constitute financial advice. Your personal circumstances may differ. Talk to your broker about your specific situation.
Sources: RBA Monetary Policy Decision, March 2026 (rba.gov.au); Savings.com.au home loan rate analysis, March 2026; Money.com.au fixed rate analysis, March 2026; MFAA borrower intent data, 2026.
