Fixed or Variable in 2026? The RBA Just Turned It Into a Coin Toss
On 16 June 2026 the Reserve Bank held the cash rate at 4.35%, after lifting it three times earlier in the year. The pause settled nothing. The bigger story is that the major banks now openly disagree on what happens next.
CBA, NAB and ANZ are tipping a cut in August. Westpac is tipping another hike. When the banks cannot agree, you get the one thing that makes fixed versus variable genuinely hard: a coin toss on the direction of rates.
Here is how to actually choose in this market, what the numbers say today, the catch most articles skip, and why a split loan is the answer a lot of my clients land on.
Indicative figures as at mid-June 2026. Sources: RBA, Canstar. Rates change, so treat these as a snapshot.
What you are actually choosing
Strip away the jargon and you are choosing between two things: certainty and flexibility.
A fixed rate locks your interest rate, and so your repayment, for a set term (usually one, two or three years). Your repayment does not move if the cash rate rises, which is the whole appeal. The catch is that it does not move if rates fall either, and fixed loans usually limit extra repayments and rarely come with a full offset account.
A variable rate moves with the lender. When the RBA cuts and your lender passes it on, your repayment can fall. You also get the good stuff: offset accounts, free redraw, and the freedom to pay extra or refinance without break costs. The trade-off is that if rates climb, your repayment climbs with them. Variable rates are not something you can lock, they move with the lender by design.
Where the rates actually sit right now
This surprises people: in mid-2026, the sharpest variable rates are actually lower than the sharpest fixed rates. Fixing today usually means paying a small premium up front for certainty.
Out of the big lenders, Macquarie has been the sharpest on three year fixed near 6.09%, with ANZ around 6.29% on two years. The market average variable for owner-occupiers sits around 6.64%, while the most competitive variable rates for strong borrowers are down in the high 5s.
Indicative owner-occupier rates as at mid-June 2026 (RBA, Canstar). Your actual rate depends on your loan size, deposit and lender. Comparison rates differ from headline rates.
Put real numbers on it. On a $600,000 loan over 30 years, the gap between a sharp variable near 5.85% and a two year fixed at 6.29% is roughly $170 a month, about $2,000 a year.
That is the price of certainty today. Whether it is worth paying depends entirely on what the cash rate does from here. Fix, and you win if rates rise. Stay variable, and you win if they fall.
The quiet signal in the fixed rates
Here is the part worth understanding. Even while the RBA held the cash rate, lenders like ANZ and Macquarie have been quietly cutting their fixed rates.
Banks do not price fixed rates on emotion. A fixed rate is the bank's bet on where the cash rate is heading. When they cut fixed rates, they are signalling they expect the cash rate to fall over the next year or two. In other words, the bank is pricing in cheaper money ahead.
Read that back and it cuts both ways. If the banks are right and rates fall, the borrower who fixed today is locked above where variable rates are heading. If Westpac is right and the next move is up, the borrower who fixed looks clever. Nobody gets to know in advance, which is the whole point.
When fixing makes sense
Fixing is not about beating the market. It is about buying certainty, and that has real value for the right person. Lean towards fixing if:
Your budget is tight and another hike would genuinely hurt. A fixed rate takes that risk off the table for the term.
Self-employed, seasonal or commission income is easier to manage when at least part of your repayment cannot move.
No plans to sell, renovate or refinance in the next couple of years, so break costs are unlikely to bite.
You would rather sleep easy than squeeze out the last few dollars of saving. That is a perfectly good reason.
When staying variable makes sense
Variable is where most Australians are, and for good reason. The RBA notes that around 98% of new owner-occupier loans are variable. Lean variable if:
Offset accounts, free redraw and unlimited extra repayments live on variable loans, and they can save more than a slightly lower rate.
If you back the CBA, NAB and ANZ view that the next move is down, variable lets you benefit the moment your lender passes a cut on.
You can refinance, sell or restructure without break costs. On a young loan that freedom is worth a lot.
Throwing extra at the loan or parking cash in an offset shrinks your interest faster than a fixed rate usually lets you.
The split loan: the answer most people land on
When the direction of rates is a genuine coin toss, you do not have to call it. You can hedge. A split loan fixes part of your balance and leaves the rest variable, so you stop betting the whole loan on one outcome.
Say you split a $600,000 loan in half. The fixed half gives you a repayment that cannot rise for the term, which protects your budget. The variable half keeps your offset, your redraw and your ability to pay extra, and it benefits if rates fall. You will never have the absolute best outcome, but you will never have the worst one either.
There is no magic ratio. Nervous about another hike? Fix more. Confident cuts are coming and want flexibility? Keep more variable. Getting that mix right for your actual numbers is exactly the kind of thing a broker is for.
A simple way to think about the split
- Fixed portion: certainty. Your repayment will not rise for the term.
- Variable portion: flexibility. Offset, redraw, extra repayments, and upside if rates fall.
- The point: you stop trying to predict the RBA and cover both outcomes instead.
The part most articles skip
Break costs are real. If you fix and then need to sell or refinance early, you may pay break costs, and they can be steep if rates have fallen since you fixed. Fix only the portion you are confident you will hold for the term.
Fixed usually means fewer features. Most fixed loans cap extra repayments and do not offer a full offset. If paying down fast or parking savings in an offset matters, that is a point for variable.
You cannot lock a variable rate. Variable rates move with the lender. Anyone promising to lock in today's variable rate is describing something that does not exist. Only fixed rates can be fixed.
Watch the comparison rate, not just the headline. A sharp advertised rate with high fees can cost more than a slightly higher rate with none. The comparison rate folds the fees in.
This is general information, not financial or credit advice. Rates and policies change, and the right structure depends on your income, deposit and plans. Get advice specific to your situation before you commit.
See the numbers on your own loan first
Before you choose, it helps to see what your repayment and borrowing power actually look like. Compass is my free planner that runs your figures in a couple of minutes, no obligation.
Open Compass, freeKeep reading
If you are already on a rate you suspect is too high, start with when it is actually worth refinancing. Working out your budget first? See how much you can borrow. And if you are weighing the bigger rate picture, here is what the Australia and New Zealand rate gap means for investors.
Not sure which way to lean? Let us run your numbers.
One short call, no obligation. We will look at your real loan, your budget and your plans, then map fixed, variable or a split to what actually suits you.
Book my free strategy callMatty Teague, Mortgage Broker, Powered by Flint. Credit Representative 573962. Flint Group Pty Ltd ACL 488313.
FAQs
Should I fix my home loan in 2026?+
It depends on how much certainty matters to you. With the RBA on hold at 4.35% and the big banks split on whether August brings a cut or another hike, there is no clearly right answer. Fix if a steady repayment matters more than chasing the lowest possible rate. Stay variable if you want full features and the chance to benefit from a cut. Plenty of borrowers split the difference and do both.
Are fixed rates lower than variable right now?+
Generally no. As at mid-June 2026 the sharpest variable rates for owner-occupiers sit in the high 5s, while the sharpest big-lender fixed rates are around 6.09% to 6.29%. You are usually paying a small premium today for the certainty a fixed rate gives you over the next two or three years.
Can I make extra repayments on a fixed loan?+
Usually only up to a capped amount each year, and most fixed loans do not come with a full offset account. If paying your loan down quickly is the goal, a variable rate or a split structure gives you far more room to move.
What is a split home loan?+
You fix part of your loan and leave the rest variable. You get repayment certainty on the fixed portion and keep flexibility, offset and extra repayments on the variable portion. It is a common middle path when no one can confidently call the next rate move.
What happens if I break a fixed rate early?+
You may pay break costs, which can be significant if rates have fallen since you fixed. That is the trade-off for certainty. If there is any chance you will sell or refinance before the fixed term ends, factor break costs in before you commit.
Will the RBA cut the cash rate in 2026?+
No one knows for sure. After holding at 4.35% on 16 June 2026, CBA, NAB and ANZ are tipping a cut in August, while Westpac is tipping another hike. That genuine disagreement is exactly why fixed versus variable is such a close call right now.
I help Australian buyers and investors structure their loans for the cycle we are actually in, not the one a bank brochure assumes. Fixed, variable or a split, the right answer is the one that fits your numbers.
Book a Free Chat