Here’s the latest “Should I Fix?” update, where I compare the cheapest variable and fixed rates to see which one makes more sense right now, based on the latest forecasts and what’s happening with inflation and the Reserve Bank (RBA).
Watch the full video here:
Should I Fix? Comparing Fixed vs. Variable Rates for Your Mortgage 📊
What’s happening right now
- The most recent inflation (CPI) numbers came in a bit higher than expected, which means the RBA is now holding steady and waiting to see how things play out.
- The next RBA meeting is in February 2026, so we’re likely in a bit of a holding pattern until then.
- Personally, I think that jump in inflation was just a blip. Whilst unemployment has dropped slightly, job ads are slowing, and people are spending a little less – all signs that business and consumer confidence is dropping meaning inflation will keep easing back down.
My view on what’s next
The big banks are forecasting on average two 0.25% cuts next year – one in the first half and another in the second, although realistically, by the end of next year, I believe rates could still be about 0.75% lower than they are now.
Fixed vs Variable – what cost difference is (based on forecasts)
In my video, I run the numbers on a $500,000 loan as an example comparing a 5.14% variable rate with the following results
- 1-year fixed at 4.99% – Over 12 months, that’s only about a $500 difference – not much in it.
- 2-year fixed at 4.89% – If the variable rate drops as expected, the variable might end up slightly cheaper – but only by about $1,200.
- 3-year fixed at 4.79% – Still only around $900 difference if the forecasts come true.
But, the real question isn’t just which one saves you the most money… It’s which one helps you sleep better at night.
My simple take
Think of fixing your loan like buying insurance – it might cost a few hundred dollars more, but it gives you peace of mind. If you’ve got big life plans (starting a business, having a baby, reducing work hours, etc.), fixing part or all of your loan could make sense just to lock things in. If you need flexibility, like making big extra repayments, selling your property, or using an offset account, then keeping your loan variable is the smarter play.
A good balance can be a split loan (e.g. half fixed, half variable), so you get a bit of both worlds.
A few quick reminders
- Most fixed loans don’t offer offset accounts.
- Extra repayments are usually capped at around $10,000 a year (depending on the lender).
- Break fees can apply if you refinance or sell before the fixed term ends.
Final thoughts
No one can predict rates perfectly, not even the experts with forecasting teams with unlimited budgets! So focus on what suits your situation, your stress levels, and your plans for the next few years.
If you want to chat about which option fits you best, reach out any time. We’re always here to help.