To Fix or Not to Fix in 2026? What the Outlook Really Looks Like
Only a short time ago, we were able to secure a 4.89% home loan rate for a client who was an owner-occupier — a result that now feels well below the market, particularly after the December inflation data surprised to the upside.
Rates below 5% are already becoming harder to find, and fixed rates in particular have moved noticeably higher. So the question many borrowers are asking is:
What does 2026 look like — and should you be fixing your home loan now?
As always, the answer isn’t black and white.
Why That 4.89% Matters
The reason this rate stands out isn’t just the number — it’s the timing.
Markets had been pricing in rate cuts. Fixed rates were easing. Competition between lenders was strong.
Then inflation data came in hotter than expected.
Almost immediately:
Fixed rates ticked up
Lenders became more cautious
Sub-5% options started disappearing
This is a good reminder that rates can change quickly, and the “window” for sharp pricing can close just as fast.
What’s Driving the 2026 Interest Rate Outlook?
1. Inflation Is Still the Deciding Factor
While inflation is trending down overall, it remains above the RBA’s target band, and recent data shows it’s not a straight line lower.
That means:
Rate cuts are not guaranteed
A “higher for longer” environment is still possible
The risk of at least one more hike in 2026 hasn’t disappeared
The RBA has made it clear they’d rather risk slowing growth than let inflation re-ignite.
2. Fixed Rates Are No Longer “Cheap Insurance”
For much of 2024–2025, fixing felt like a safety net at a reasonable cost.
In early 2026:
Fixed rates are already pricing in future uncertainty
Many fixed options are now above variable rates
Borrowers are effectively paying for certainty
That doesn’t mean fixing is wrong — it just means the decision needs to be deliberate.
3. Lending Rules Are Tighter
With new APRA debt-to-income limits now in effect, lenders are more selective with higher-risk borrowers.
This matters because:
Refinancing may not be as easy later
Being locked into a fixed loan can reduce flexibility
Borrowers close to their borrowing limit need options
So… Should You Fix Your Home Loan in 2026?
Fix (or Part-Fix) If:
You value certainty and stability
A rate increase would materially impact your cash flow
You’re not planning to sell, refinance or restructure soon
You want protection against short-term volatility
For many borrowers, 1–2 year fixed terms or split loans make the most sense right now.
Stay Variable If:
You want flexibility to make extra repayments
You’re using an offset strategy aggressively
You may refinance, invest or upgrade within 12–24 months
You believe rates are more likely to hold than rise
Variable loans still offer the most control — particularly in a policy-driven environment like we’re in now.
The Strategy Most Borrowers Are Choosing
In 2026, I’m seeing fewer “all-in” decisions and more measured structures, such as:
Splitting loans (e.g. 40–60% fixed, the rest variable)
Fixing the portion that protects household cash flow
Keeping flexibility on the remainder
This approach hedges risk without locking you into a single view of the future.
Final Thought
That 4.89% rate wasn’t luck — it was timing, strategy and preparation.
In 2026, the borrowers who will do best are the ones who:
Don’t chase headlines
Understand their own risk tolerance
Structure loans for flexibility, not just rate
Fixing isn’t about predicting the RBA — it’s about protecting your lifestyle while keeping your options open.
If you’re unsure whether fixing, staying variable or splitting your loan is right for you, now is the time to review your structure — before the next data release shifts the market again.
To explore your options, you can book a complimentary discovery call with Founding Director and Principal Mortgage Broker Adam Kingston.
Adam will walk you through:
Your borrowing capacity as an Australian expat
Benefits of vixing v remaining on a variable interest rate
How APRA’s new rules apply to your situation
The most appropriate lending strategy for your goals
All with the clarity, care and expertise Australian Expat Finance clients consistently praise.
The information contained is general information only and does not consider your objectives, financial situation and needs. Please talk to us if you need a fast-tracked home loan, and we can help you find a lender that has the processes in place to process the application quickly. We strongly recommend that you do not act on any information provided on this website without individual advice from your trusted advisor. You should also obtain a copy of and consider the Product Disclosure Statement for all financial products before making any decision.
Australian Expatriate Finance always tries to make sure all information is accurate. However, when reading our website, please always consider our Disclaimer policy.
