Quick answer: a fixed rate keeps your repayments the same for a set period. A variable rate can go up or down, and it often comes with extra repayments and features like an offset account. A split loan gives you some of each. The right choice depends on how much room your budget has if repayments rise, and on what you may need to do during the loan.
Current as at October 2026.
On 29 September 2026 the Reserve Bank decided to raise the cash rate. It was the fourth rise this year, after increases in February, March and May. The cash rate is the interest rate on unsecured overnight loans between banks. Changes to it may influence variable home loan rates, but lenders can also change rates for other reasons.
The move in the cash rate matters less than what your loan does next. Whether your budget can take a further rise is the question to answer, and you can work it out with your own numbers before the next RBA meeting.
Does a fixed rate lock in your repayments?
Yes, for the fixed period. A fixed rate stays the same for a set period, usually between one and five years, and your repayments won’t change during that time, even if market rates rise or fall. Moneysmart describes this as protection against rate rises during the fixed period.
When the fixed period ends, the loan usually moves to the lender’s variable rate, which is called the revert rate. It happens unless you switch loans or agree to another fixed period. Find out what that revert rate is before you fix, because it is the rate your loan usually moves to.
If you are already on a fixed rate that is about to end, our post on the fixed rate cliff covers the choices you have at that point.
What do you give up with a fixed rate?
If rates fall, you won’t benefit while the rate is fixed. Some fixed loans also come with fewer features, such as offset accounts or the ability to make extra repayments. And you may be charged a break fee if you switch home loans, sell the property or pay off the loan early.
That last point matters most if you expect to refinance or sell within the fixed period. Ask the lender how it works out break costs, because the amount depends on rates at the time you leave.
What does a variable rate give you?
Your repayments may decrease if interest rates fall. It is often easier to refinance or switch a variable loan, many variable loans allow extra repayments, and features such as offset accounts and redraw facilities are often available. The trade-off is that repayments can increase unexpectedly when interest rates change, and budgeting can be harder because costs may change.
If your income is steady and your budget already has a buffer, that flexibility may be worth the uncertainty. If it doesn’t, the same flexibility can cut the other way, and a higher repayment can feel like a bigger shock than you expected when you signed.
Is a split loan the middle option?
A split loan divides your loan into two parts, one fixed and one variable. You agree with the lender how much goes into each part. You get more certainty on the fixed part and flexibility to make extra repayments on the variable part.
It’s also more complex, and it asks you to keep track of two sets of terms. Different rates, fees, features and conditions can apply to each part, so add up the total cost before you choose. Ask which part can be linked to an offset account, and what happens to the fixed part when its period ends.
When are the next RBA decisions?
The RBA’s board meets on 2 and 3 November and 7 and 8 December 2026, and 8 and 9 February 2027, according to its board meeting schedule. The RBA issues each decision in a media release at 2.30 pm after the meeting, and any change to the cash rate takes effect the following day.
We don’t know what the RBA will do at those meetings, and nothing in this article is a view on where rates go. What you can plan for is the repayment amount you’d pay at a higher rate, and whether your budget copes with it. Our how refinancing works page covers the steps if you decide to switch.
Questions to ask before you choose
- How much of the loan would be fixed, and how much would stay variable?
- What variable rate would apply when the fixed period ends?
- Can I make extra repayments, and are there fees for doing it?
- Which features come with each option, and do I need them?
- What break fee applies if I refinance or sell during the fixed period?
Ask for the answers in writing. Get the fees in writing too, before you sign anything.
Loan Lounge works with a panel of 75+ lenders. Lenders pay brokers a commission through upfront and trail payments, and for most residential lending there is no direct fee to the customer. Book a loan review to work through your numbers.
Frequently asked questions: fixed or variable home loans
Can I fix part of my loan?
A split loan does exactly that: one part is fixed and the other stays variable. Check the fees and conditions for each part, because they can differ.
What happens when my fixed period ends?
The lender usually moves the loan to its variable rate, the revert rate, unless you switch or agree to another fixed period. Ask for that rate before you fix.
Will fixing stop my repayments going up?
During the fixed period, yes. Your repayments stay the same. After it ends, they can change, and a break fee may apply if you leave early.
Do fixed loans allow extra repayments?
Not every fixed loan does. Some have fewer features, including the ability to make extra repayments, so check the terms before you fix.
If you want a second look at your loan structure before the next decision, talk to a Loan Lounge broker. You can also read our services page to see the loans we arrange.
This is general information only. It doesn’t take your objectives, financial situation or needs into account and isn’t financial, tax or legal advice. Nothing here is a prediction of interest rates. Loan Lounge, ACL 515608.
Sources
- Reserve Bank of Australia, “Statement by the Monetary Policy Board: Monetary Policy Decision”, 29 September 2026: https://www.rba.gov.au/media-releases/2026/mr-26-27.html
- Reserve Bank of Australia, “Cash Rate Target” (rate changes table): https://www.rba.gov.au/statistics/cash-rate/
- Reserve Bank of Australia, “Board Meeting Schedules”: https://www.rba.gov.au/schedules-events/board-meeting-schedules.html
- Moneysmart, “Fixed vs variable home loan interest rates”, last updated 16 September 2026: https://moneysmart.gov.au/home-loans/fixed-vs-variable-home-loan-interest-rates
- Loan Lounge, company information: panel of 75+ lenders; lenders pay commission and most residential lending has no direct fee to the customer.