The short answer
- The cash rate has risen four times in 2026, to 4.60%, and the RBA has said it could go higher if needed.
- Fixing gives you certainty, but you can't benefit if rates fall, and leaving early can mean break costs.
- Variable loans are more flexible, with offset accounts and unlimited extra repayments, but your repayments can rise.
- A split loan lets you fix part and keep part variable.
- The right choice depends on your budget and plans, not on guessing where rates will go.
Where rates are now
On 29 September 2026 the Reserve Bank raised the cash rate by 0.25% to 4.60%, its fourth rise this year. It said inflation remains elevated and some upside risks are materialising, and that it will keep acting to bring inflation back to target, "including increasing the cash rate target further if needed". Source: RBA
Nobody can say for sure where rates go from here, and fixed rates already reflect what lenders expect. So rather than trying to predict the market, it's better to ask what you need from your loan.
What a rate rise means for your repayments
On a $500,000 loan over 30 years, each 0.5% rise adds around $163 a month:
| Interest rate | Monthly repayment | Difference |
|---|---|---|
| 6.0% | $2,998 | Starting point |
| 6.5% | $3,160 | +$163 a month |
| 7.0% | $3,327 | +$329 a month |
Principal and interest repayments, example rates only. Your actual rate depends on your lender and loan.
Fixed, variable or split?
| Fixed | Variable | Split | |
|---|---|---|---|
| Repayments | Set for the fixed term, usually 1 to 5 years | Go up or down with the lender's rate | Part set, part can change |
| If rates fall | You don't benefit | Repayments can drop | The variable part benefits |
| Extra repayments | Often limited | Usually unlimited | Unlimited on the variable part |
| Offset and redraw | Often not available or limited | Usually available | Usually on the variable part |
| Leaving early | Break costs may apply | Usually easy to switch | Break costs on the fixed part |
Features vary between lenders. Source: Moneysmart
When fixing can make sense
- Your budget is tight and a rise in repayments would cause real stress.
- You value certainty, for example while one partner is on parental leave.
- You don't plan to sell or refinance during the fixed term.
- You don't need an offset account or to make large extra repayments.
When variable can make sense
- You have savings to put in an offset account, which reduces the interest you pay.
- You want to pay the loan down faster with extra repayments.
- You might sell, refinance or restructure in the next few years.
- You have a buffer to absorb higher repayments if rates keep rising.
Check these before you fix
- Break costs. If you sell, refinance or pay the loan off early, you may pay a break fee. It's usually higher if rates have fallen since you fixed, and can run into thousands of dollars.
- Extra repayment limits. Many fixed loans cap how much extra you can pay each year.
- Offset and redraw. Check whether they're available on the fixed part.
- The revert rate. When the fixed term ends, the loan usually rolls onto the lender's variable rate, which may not be its best. Diarise the date and review your loan before then.
- Rate lock. If you're buying, a fixed rate can change before settlement. Some lenders let you lock it in for a fee.
- A split. Fixing part of the loan can give you certainty without giving up all your flexibility.
Already on a fixed rate that's about to end? Our free rate check can tell you whether your current lender's offer stacks up.
Information is general and correct as at October 2026. Interest rates change, and this isn't a prediction of future rate movements.