“Whether to fix in 2026 comes down to one question: how much certainty is that repayment figure worth to you, and at what premium over the variable rate?”
The RBA lifted the cash rate to 4.35% in May 2026 — the third increase this year. Westpac is forecasting two further rises in June and August that would take the cash rate to 4.85%. In that environment, fixing your rate can look appealing. But the decision is rarely as straightforward as locking in before the next hike.
What fixing actually does
A fixed rate freezes your repayment for the term you choose, which is typically one to five years. While you won’t be hurt if rates rise further, you also won’t benefit if rates fall. Ultimately, you give up flexibility in exchange for certainty.
Where fixed rates are priced right now
Fixed rates are priced off wholesale swap markets rather than the RBA cash rate directly. In periods where further rate rises are expected, lenders often price those anticipated future hikes into fixed terms already. This means fixing now protects you from surprises beyond what the market has already factored in.
The trade-off worth understanding
Variable rates offer flexibility, whereas fixed rates do not. If your circumstances change, such as a property sale, a refinance opportunity, or an inheritance, you may face a significant break cost to exit a fixed loan. Therefore, the value of fixing is highest when you are confident you will hold the loan for the full term.
What most borrowers get wrong
Most borrowers fix based on a prediction about where rates are going. However, markets are already pricing in those same predictions. You are not fixing based on information others don’t have; instead, you are making a preference decision between certainty and flexibility.
→ You may wish to speak with a licensed mortgage broker to assess your personal circumstances. This is general information only. Individual circumstances vary and scheme details change regularly. Verify current eligibility, caps, and terms with official sources before making decisions. Speak with a licensed mortgage broker for advice tailored to your situation. All loans are subject to lender approval.
Sources: RBA Cash Rate Target (rba.gov.au/statistics/cash-rate/); Canstar, Interest Rate Forecast Australia, May 2026; ASIC MoneySmart, Fixed Rate Home Loans 2025.
