Fixed vs Variable Rates in 2026: How to Make the Right Call Right Now

You’ve been watching the rates. Maybe you’ve been following the RBA decisions — they meet eight times a year now, roughly every six weeks, with the announcement always dropping on a Tuesday at 2:30pm — trying to decode what the economists are saying, wondering if you should lock in or ride it out. You’re not alone — this is genuinely one of the most common questions I get, and right now in March 2026, it’s more nuanced than ever.

So let’s cut through the noise.

Where Things Stand Right Now

We’ve seen the RBA ease the cash rate down to 4.10% after that long hold through most of 2024 and 2025. Markets are pricing in another one or two cuts this year, but nobody — and I mean nobody — knows for sure.

Here’s what that means in practical terms. Most competitive variable rates for owner-occupiers with a solid deposit are sitting around 5.89% to 6.15%. Fixed rates for 2-year terms are hovering around 5.49% to 5.79%, depending on the lender and your LVR. Three-year fixed terms are a touch higher.

That gap between fixed and variable tells you something important: the banks are already baking expected cuts into their fixed pricing. They’re not giving you a discount out of generosity. They’re betting that variable rates will come down to meet — or dip below — those fixed rates over the term.

The Real Question Isn’t “Which Is Lower?”

The rate itself is only half the story. The right choice depends on your situation, your cash flow, and what you actually need from your loan structure.

Variable makes sense when you:

• Have an offset account you’re actively using (this is huge — more on that below)
• Want the flexibility to make extra repayments without penalty
• Can absorb some rate fluctuation without losing sleep
• Are planning to sell or refinance within the next 1-2 years

Fixed makes sense when you:

• Need certainty because your budget is tight
• Are on a single income or have irregular cash flow
• Want to lock in while fixed rates are pricing in future cuts
• Are buying your first home and want breathing room in year one

Let’s Run the Numbers — A Sutherland Shire Example

Say you’ve just bought a three-bedroom house in Jannali for $1.25 million with a $250,000 deposit. Your loan is $1,000,000 on a 30-year term.

Option A: Variable at 6.05% Monthly repayment: approximately $6,030. But you have $40,000 sitting in an offset account, which effectively reduces your balance to $960,000 for interest calculation purposes. That saves you roughly $200/month in interest. If variable rates drop by 0.50% over the next year as expected, your repayment drops to around $5,720.

Option B: 2-year fixed at 5.59% Monthly repayment: approximately $5,740. Stable, predictable, no surprises. But no offset benefit, and if you need to break the loan early — say you get a great offer on the house or want to refinance — break costs could run into the thousands.

Over 24 months, if rates do fall as markets expect, the variable borrower with a healthy offset likely ends up in a similar position — or even ahead. But the fixed borrower sleeps better at night for those two years.

Neither answer is wrong. It depends on what matters more to you.

The Split Loan: Best of Both Worlds?

This is what I recommend more often than people expect. You don’t have to go all-in on one or the other. A common structure I set up for clients across the Shire — whether they’re buying in Cronulla, Caringbah, or Engadine — is a 70/30 or 60/40 split.

Fix the bulk of the loan for repayment certainty. Keep the rest variable with a full offset account attached. You get stability and flexibility. If rates drop sharply, you benefit on the variable portion. If they hold or rise, your fixed portion shields you.

My Honest Take

Here’s where I’ll be direct: most people overthink this decision and underthink their loan structure. Whether you’re fixed or variable matters far less than whether your loan has the right features, your offset is working properly, and your overall debt structure is set up to build wealth — not just service a mortgage.

I’ve seen clients save tens of thousands not by picking the “right” rate, but by restructuring how their loans were set up. That’s where the real value of working with a broker comes in.

Let’s Talk About Your Loan

If you’re buying, refinancing, or just wondering whether your current setup is costing you — I’d love to have a look. I’m based right here in the Sutherland Shire and I do this every single day.

And if you’re thinking about using your home equity to invest in property, read my guide on how to use home equity to build a property portfolio.

Give me a call on 0424 175 869 or fill out a quick enquiry at annawilliams.finance. No pressure, no jargon, just honest advice tailored to your numbers.