This week, the Reserve Bank of Australia increased the cash rate by another 0.25%, which has once again sparked the question:
“Should I fix my home loan?”
The honest answer is: maybe – but it depends more on your personal situation than the forecasts themselves.
Right now, a lot of the major bank forecasts are expecting:
- potentially another short-term increase,
- rates remaining elevated for a period,
- and then gradual cuts once economic growth slows and inflation eases.
That’s important because fixed rates already factor in those expectations. Banks don’t wait for the RBA to move before adjusting fixed pricing – they move based on what they think will happen next.
Based on current pricing, some shorter-term fixed rates are actually working out slightly cheaper than variable rates if those forecasts come true.
But fixing isn’t just about trying to “beat the bank.”
I always say fixed rates are a bit like insurance:
- you might pay slightly more,
- you might save money,
- but the real benefit is certainty.
That can matter if:
- you’re upgrading,
- starting a family,
- changing jobs,
- starting a business,
- or just want predictable repayments for a while.
On the flip side, variable loans generally offer:
- more flexibility,
- offset accounts,
- easier refinancing,
- and unlimited extra repayments.
So really, the question isn’t:
“Will I save $1,000?”
It’s:
“How important is certainty to me over the next 1-3 years?”
Personally, I think the next 12 months are probably the hardest period to predict. Beyond that, there’s a reasonable argument that slowing economic conditions eventually lead to lower rates again – but nobody knows for certain.
I’ve recorded a short breakdown comparing the latest variable and fixed rates here: