The RBA raised the cash rate three times in the first half of 2026, bringing it back to the current cash rate — reversing all three cuts made in 2025. For Australians with a mortgage, that has restarted a familiar and stressful conversation: should I fix my rate, stick with variable, or refinance to a different lender altogether? The answer depends heavily on your situation, and this article gives you the framework to think it through.
What has actually changed in 2026
The rate hikes in 2026 have added materially to variable rate repayments since the start of the year. For a typical variable loan, each rate hike adds meaningfully to monthly repayments. Major banks ANZ and CBA currently predict no further hikes in June 2026. NAB forecasts one more 25bp increase in August, while Westpac forecasts two more — which would take the cash rate to 4.85% before year end. Nobody knows who is right.
That uncertainty is exactly why the fixed vs variable decision in mid-2026 is not straightforward.
The case for fixing now
If you are on a tight monthly budget and further rate hikes would put real pressure on your repayments, fixing removes that uncertainty. A fixed rate locks your repayment amount for the term — typically 1, 2, or 3 years — regardless of what the RBA does next. Fixed rates at major lenders have already moved up in response to the 2026 hikes, so they partially price in expected further increases. This means fixing now is not necessarily cheaper than your current variable rate — it is about buying certainty.
Fixed rates are most appropriate if: you need repayment certainty because your budget has limited capacity to absorb further increases; you are planning no major changes (selling, refinancing, or large lump sum payments) during the fixed period; and you are comfortable foregoing offset account access and unlimited extra repayments.
Most fixed home loans in Australia cap extra repayments at $10,000–$20,000 per year. Payments above this cap can trigger break cost penalties — even if you are not exiting the loan.
The case for staying variable
Variable rates offer flexibility that fixed rates cannot match: unlimited extra repayments, access to an offset account (which reduces your daily interest), and no break costs if you need to sell, refinance, or restructure. In a market where the rate outlook is genuinely uncertain — with major banks split on whether hikes will continue — fixing means betting on one outcome. If rates plateau or start falling, you’re locked in above the market rate for the term.
Variable rates also typically come with more competitive cashback offers from lenders looking to attract refinancers. Switching lenders on a variable rate costs nothing beyond the refinancing process itself.
Break costs: what most people forget
If you fixed your loan in 2024 or early 2025 when rates were lower — and now want to refinance or sell — you may face significant break costs. Break costs are calculated based on the difference between your locked rate and the lender’s current wholesale rate for the same term. If rates have risen since you fixed (which they have in 2026), your break cost is likely minimal or zero. If rates fall before your term expires, a break cost becomes payable to exit.
Always request a break cost calculation from your lender before assuming you can refinance freely out of a fixed loan.
The split loan option
A split loan fixes a portion of your debt (for repayment certainty) and leaves the remainder on variable (for offset access and flexibility). For example, fixing a portion of your loan gives you certainty on that component while keeping the remainder variable with full offset access. If you exit the loan early, only the fixed component attracts a break cost calculation. Broker360 noted in May 2026 that split loans are “optimal when rate direction is genuinely uncertain” — which describes the current environment well.
Should you refinance to a different lender?
Refinancing is not just about the rate — it is about whether your current lender is still the right fit for your situation. Borrowers who took out loans in 2021–2022 at competitive rates may have moved to revert rates that are now significantly above what new customers receive. Lenders routinely offer better rates to new customers than to existing ones who don’t actively negotiate.
A broker can run a like-for-like comparison across 40+ lenders at no cost to you, identifying whether your current lender is still competitive — and whether the savings from refinancing outweigh any discharge and establishment fees involved in switching.
For a current comparison across lenders for your specific situation, speak with the Tiger Mortgage team.
Learn more: tigermortgage.com.au/services/residential-loans/
Disclaimer: This article is general information only and does not constitute financial advice. Speak to a licensed mortgage broker about your specific situation.
