With the RBA rate cycle turning in 2024-2025, the fixed vs variable question is more important than ever. Locking in at the wrong time costs tens of thousands. Here is the complete 2026 comparison.
Current Rate Environment (2026)
| Product | Rate Range | Best For |
|---|---|---|
| Variable (standard) | 5.9-6.4% | Flexibility seekers, rate fall beneficiaries |
| Variable (offset) | 6.0-6.5% | Cash savers, salary creditors |
| Fixed 1 year | 5.6-6.1% | Short-term certainty |
| Fixed 2 year | 5.5-6.0% | Medium certainty |
| Fixed 3 year | 5.7-6.2% | Those expecting rates to rise again |
| Split (50/50) | Combined average | Hedge both ways |
The Case for Variable in 2026
The RBA began cutting rates in February 2025. If cuts continue through 2026-2027, variable rate borrowers automatically benefit without paying break costs. Variable also allows unlimited extra repayments and redraw access.
The Case for Fixed in 2026
If you need budget certainty (especially investors relying on rental income to cover repayments), a short fixed term locks in your cost base. With rates potentially bottoming mid-2026, a 2-year fix at 5.5% could look excellent by 2028 if rates rise again.
GeeVee Verdict
For most borrowers in 2026: variable or split. The RBA cutting cycle favours variable rate borrowers. Only fix if you genuinely need repayment certainty and cannot afford variable rate volatility. A 50/50 split hedges both outcomes and gives partial offset account access.
Model your repayments under both scenarios: collings.com.au/portal
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