Fixed vs Variable Rates in 2026

With the RBA hiking rates again, the fixed-or-variable question is back. The answer depends on your risk tolerance, how long you plan to hold the loan, and what you think rates will do next. Here's the honest breakdown.

Where Rates Sit Right Now

As of April 2026, typical rates for owner-occupier, principal and interest loans:

Product	Typical Range	Best Available
Variable rate	6.0% – 7.0%	~5.80%
1-year fixed	5.8% – 6.8%	~5.60%
2-year fixed	5.5% – 6.5%	~5.40%
3-year fixed	5.5% – 6.5%	~5.30%
5-year fixed	5.5% – 6.5%	~5.40%

Rates are indicative and change frequently. Check with a broker or comparison site for current offers.

The Case for Variable

• Flexibility: Unlimited extra repayments, full redraw, and offset account access.
• No break costs: You can refinance at any time without penalty.
• Benefits if rates fall: If the economy weakens and rates eventually come down, you'll benefit immediately.

The Case for Fixed

• Certainty: Your repayments won't change for the fixed period, no matter what the RBA does.
• Protection from further hikes: If rates continue rising toward 4.85% as some market pricing suggests, a fixed rate locks in today's level.
• Budget stability: Particularly valuable if you're near the mortgage stress threshold.

The Case for a Split Loan

Many borrowers split their loan — fixing a portion (often 50-70%) for certainty while keeping the rest variable for flexibility and offset access. This is a reasonable middle ground in uncertain rate environments. Ask your lender or broker about split loan options.

What the Market Expects

As of April 2026, interest rate futures markets have priced in the possibility of the cash rate reaching 4.85% by late 2026 — meaning two more hikes beyond the current 4.10%. However, the RBA Board itself was split 5-4 on the March hike, suggesting genuine uncertainty within the Bank itself.

The key variable is inflation. If the March quarter CPI data (due 29 April) shows inflation moderating, the case for a May hike weakens. If inflation remains sticky or accelerates, another hike becomes likely.

The Fixed-Rate Cliff: A Cautionary Tale

Hundreds of thousands of Australians locked in fixed rates at 2-3% during 2020-2022. As those terms expire and borrowers roll onto variable rates above 6%, the repayment shock has been significant — often $500-900+ per month. If you're currently on a low fixed rate approaching expiry, start planning now: model the new repayment using our Repayment Calculator, and use the Refinancing Calculator to check if better rates are available elsewhere.