In short: With the cash rate at 4.35% in September 2026 and bank economists divided on the next move, the fixed-or-variable choice should be made on your own circumstances rather than a forecast. Fix if certainty of repayments matters more than flexibility, stay variable if you use an offset and expect to make extra repayments, and split if you want a bit of both.
Key takeaways
- The RBA cash rate is 4.35%, held at the August 2026 meeting; the next decision is 29 September 2026.
- Fixing buys certainty, not savings. Whether it ends up cheaper depends on what variable rates do, which is unknowable in advance.
- A fixed loan usually limits extra repayments and often has no offset account, and breaking it early can cost thousands.
- A split loan (part fixed, part variable) halves your exposure to rises and keeps an offset on the variable portion.
- Whatever you choose, budget for repayments 0.50% higher than today.
Every few months a client asks us whether now is the moment to fix, and every few months the honest answer is the same: nobody knows where rates will be in two years, including the banks, whose own forecasts currently point in different directions. What we can do is give you a framework that produces a sensible answer for your situation, whatever the Reserve Bank does on 29 September. That is what this post is.
Where things stand in September 2026
The Reserve Bank left the cash rate at 4.35% in August 2026. Inflation is above the RBA's 2 to 3% target band, and the major banks are split: at the time of writing some economists expect a rise before the end of the year while others expect the rate to stay on hold. You can read the Board's own reasoning in its monetary policy decisions, and our guide to the RBA cash rate and your mortgage explains how a cash-rate move flows through to what you pay.
The important point for this decision: lenders set fixed rates based on where they think rates are going, not where they are today. If the market expects a hike, fixed rates already include it. You are not getting a head start by fixing; you are buying insurance at a price the market has already set.
The decision framework
Answer these five questions honestly. Each one pushes you towards fixed, variable or split.
1. How much would a rise actually hurt?
For illustration, at 6.00% p.a. a $600,000 loan over 30 years costs about $3,597 a month. Here is what the same loan costs if variable rates move:
| Rate | Monthly repayment | Change vs 6.00% |
|---|---|---|
| 5.75% | $3,501 | minus $96 |
| 6.00% | $3,597 | nil |
| 6.25% | $3,694 | plus $97 |
| 6.50% | $3,792 | plus $195 |
If a $195 a month rise would be uncomfortable but manageable, variable is viable. If it would push you into mortgage stress (and you should know your financial hardship rights either way), the certainty of a fixed rate has real value regardless of whether it ends up cheaper. Run your own loan through the repayment calculator.
2. Do you have, or want, an offset account?
Most fixed loans either have no offset or a limited one. If you keep $40,000 in an offset against a 6.00% loan, that saves you $2,400 a year in interest, and that money stays accessible. Fixing the whole loan usually means giving that up. Salaried couples with healthy savings often find the offset is worth more than any rate advantage from fixing.
3. Will you make extra repayments?
Fixed loans typically cap extra repayments, often at a set amount per year. If you plan to throw bonuses, tax refunds or a second income at the loan, variable gives you free rein. See the extra repayments calculator for what that does to your term.
4. Might you sell, refinance or restructure in the next two to three years?
Breaking a fixed loan before the term ends can trigger a break cost, which is the lender's calculation of what it loses on the funding it locked in for you. When variable rates have fallen since you fixed, break costs can run to tens of thousands. If there is any chance of moving, upgrading or refinancing inside the fixed term, fix a shorter period or a smaller portion. Our guide to breaking a fixed rate loan has the detail.
5. What is the rate gap right now?
Compare the fixed rate on offer with the variable rate you could get, using the loan comparison calculator and the comparison rate, not the headline. MoneySmart's guide to choosing a home loan explains what the comparison rate includes. If two-year fixed is well above variable, the market is pricing hikes and you pay for that certainty upfront. If fixed is below variable, the market expects cuts and you are betting they do not come as quickly as priced.
The split option, worked through
A split loan lets you fix part and leave part variable. Take the $600,000 loan and split it 50/50:
- $300,000 fixed for two years: repayments locked, no surprises.
- $300,000 variable: offset account attached, unlimited extra repayments.
If variable rates rise 0.50%, only the variable half feels it, so your monthly increase is about $97 rather than $195. If rates fall, you still benefit on half. And your savings keep offsetting interest on the variable portion. Model different proportions with the split loan calculator.
Splits do not have to be 50/50. Borrowers who prize certainty might fix 70%; those with big offset balances might fix 30%. The proportion should reflect how much of the loan you realistically expect to pay down or offset in the fixed period.
Who tends to fix, and who tends not to
| Borrower situation | Usual lean |
|---|---|
| Single income, tight budget, no savings buffer | Fix most or all |
| Couple with $30,000+ in savings and an offset | Variable, or split with a small fixed portion |
| Investor prioritising predictable cashflow | Fix, often interest-only |
| Planning to sell or upgrade within two years | Variable or short fixed term |
| First home buyer on the Guarantee with a 5% deposit | Split, to cap the downside while building a buffer |
An investment property borrower in Wollert with a fixed rent and a tight yield often wants certainty above all. An owner-occupier in Greenvale with a good salary and a habit of saving usually gets more from an offset than from a fixed rate. Neither is wrong. They are answering different questions.
What to do before 29 September
You do not need to act before the RBA meets. Fixed rates are repriced continuously and have likely already moved on expectations. Instead:
- Find out your current rate. Many borrowers on loans older than two years are paying more than the same lender offers new customers.
- Get a refinance quote. The refinance calculator shows the saving from a lower variable rate, which often beats any fixed-rate strategy.
- Decide your fixed proportion using the five questions above.
- If you fix, ask about rate-lock. Some lenders let you lock the quoted fixed rate for a fee while the application is processed.
Frequently asked questions
Is it a good time to fix my home loan in 2026?
It is a good time if the certainty is worth the cost to you. Fixed rates already reflect the market's expectations for the cash rate, so fixing only "wins" if rates rise more than expected. Decide on your budget, your offset balance and your plans for the next two years rather than on a forecast.
Can I fix for one year, or only for longer terms?
Most lenders offer fixed terms from one to five years. Shorter terms give you a quicker exit and lower break-cost exposure; longer terms give more certainty. A two-year fix is the most common choice and is usually the most competitively priced.
What happens when my fixed rate ends?
The loan rolls onto the lender's standard variable rate, which is often higher than their best new-customer rate. Diarise the expiry date and review the loan a month or two before. That review is often the moment to refinance.
Does splitting cost more?
Some lenders charge a small fee per split or treat each portion as a separate loan for package purposes. Most professional packages include multiple splits at no extra cost. Ask before you sign, and compare the total cost with the loan comparison calculator.
Talk to GNT Finance
We do not predict rates. We build loan structures that work whether they go up or down. If you would like a fixed, variable or split comparison on your own figures, book a free consultation or call Gorakh Timilsina on 0426 403 703 from our Mickleham office.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.