Rates Are on the Move. Should You Fix, Stay Variable, or Split?

The Reserve Bank has lifted the cash rate several times in 2026, and it has made clear it will move again if inflation stays high. That has a lot of borrowers asking one question: should I fix?

Nobody can reliably call where rates go next, and that includes us. So don't try to pick the top of the cycle. Pick the loan structure that suits how you actually live and spend.

Variable: flexibility, but your repayments move

A variable rate rises and falls over the life of the loan. Your lender decides when it changes and by how much.

Variable loans usually come with more features:

• an offset account, which is a transaction account linked to your loan where the balance reduces the interest you're charged
• unlimited extra repayments
• an easier exit if you sell or refinance

The downside is simple. When rates go up, so do your repayments. You need room in your budget to absorb that.

Fixed: certainty, with strings attached

A fixed rate locks your repayments for a set term, usually one to five years. That makes budgeting easy. The strings are where people get caught:

• Break costs. If you sell, refinance or pay the loan off during the fixed term, the lender can charge break costs. These are calculated on interest rate movements since you fixed. If rates have fallen, break costs can be large. If rates have risen, they may be small or nothing. Only your lender can calculate the exact figure.
• Fewer features. Many fixed loans cap your extra repayments each year and limit or exclude offset accounts.
• The roll-off. When the fixed term ends, the loan moves to the lender's variable rate. That rate may be higher than what's on offer to new customers.
• The pricing. Fixed rates are influenced by what the market expects rates to do. By the time rate rises make the headlines, some of that may already be built into fixed rates.

Split: part fixed, part variable

You can split your loan: fix one portion and leave the rest variable. The fixed portion gives you some certainty. The variable portion keeps your offset account and extra repayments. Break costs generally only apply to the fixed part.

The trade-off is complexity. Each portion can carry its own rate, fees and conditions, so check the total cost of the whole loan.

Questions to ask yourself before you decide

• If repayments rose, how much could you absorb?
• Is there a real chance you'll sell, refinance or upgrade within the next few years?
• Do you keep savings in an offset account, or plan to?
• Do you make extra repayments, or want the option to?
• Is your fixed rate ending soon? Do you know what rate you'll roll onto?

ASIC's Moneysmart suggests running your repayments at a rate 3% higher than today to see if your budget holds up. That's a sensible stress test whichever option you choose.

Don't judge the decision on hindsight

Here's a common trap. Someone fixes, rates fall, and they feel they made the wrong call. But if fixing gave them the certainty they needed at the time, at a fair cost, it did its job. The right loan is judged on your situation when you choose it, not on where rates end up. That's also how brokers are required to approach their recommendations.

Where Mark comes in

Mark will lay out options from the lenders on his panel, including fixed, variable and split structures. He'll show you what each one costs, including the break cost risk, and explain why he's recommending one over another. If your current loan is still the best fit, he'll tell you that too.

Want a second opinion on your loan structure? Book a no-cost appointment with Mark at Bribie Island Lending.

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