Should I fix my home loan rate in 2026?

Fixing is a decision about certainty, not about beating the market. Lenders price fixed rates from their own expectations of where funding costs are heading, so a fixed rate is not a forecast you're being let in on — it's a price for transferring risk. The right question is never “will rates go up?” It's “what happens to my household if they do, and what am I prepared to give up to remove that possibility?”

What you give up when you fix

Most fixed loans cap extra repayments at a set annual amount, and many pay no offset benefit against the fixed portion at all. Redraw is often restricted. Break costs apply if you exit early, sell, refinance or repay a large lump sum — and unlike a variable loan's modest discharge fee, a break cost can run into thousands. The flexibility you lose is exactly the flexibility most people want in the years when their income and plans are changing.

How break costs actually work

A break cost isn't a penalty the lender invented; it's the lender's economic loss, calculated from the movement in wholesale funding rates between when you fixed and when you break, multiplied by your remaining balance and remaining term. If rates have risen since you fixed, the cost can be small or nil. If rates have fallen, it can be very large. That asymmetry matters: the scenario where you most want to escape a fixed rate is precisely the scenario where leaving is most expensive.

When fixing genuinely makes sense

When a rate rise would cause real stress rather than inconvenience — a single income, a new baby, a tight budget after a first purchase. When you're on a fixed income or need to budget to the dollar. When you have no realistic prospect of large extra repayments in the fixed period. And when you're confident you won't sell or refinance during the term. Certainty has genuine value; it's just not free.

When variable is the better answer

When you're making substantial extra repayments and want every dollar working. When you hold meaningful savings and want the full benefit of an offset account, which is often worth more than a small rate difference. When you might sell, renovate or restructure within a few years. And when you want the ability to move lenders the moment your rate stops being competitive — which, in practice, is the main protection a variable borrower has.

The split most people should consider

Splitting lets you fix the portion that covers the repayment you must protect and leave the rest variable with a full offset. A common approach is to work out the repayment level your household can definitely sustain, fix enough of the loan to keep the total within that, and leave the remainder flexible. You give up a little of both benefits and remove most of both risks, and no lender charges you meaningfully for the privilege.

The trap at the end of a fixed term

When a fixed period expires, the loan usually reverts to the lender's standard variable rate — frequently well above what a new customer is offered. This is where a great deal of money quietly disappears. Diarise the expiry date now, and make sure someone reviews your rate three months before it lands rather than three years after. That review is part of what we do for existing clients as a matter of course, at no cost.

The information on this website is general in nature and does not take into account your personal objectives, financial situation or needs. Before acting on any information you should consider whether it is appropriate for you. Terms, conditions, fees, charges and normal lending criteria apply. Rates are subject to change.