A fixed vs variable home loan decision is a bet on one thing: where the cash rate goes from here. The Reserve Bank has lifted the official rate to 4.6%, the big four are passing it on, and fixed pricing is moving up even faster than variable. That gap tells you what lenders think is coming.
What fixed pricing is telling you
Variable rates for owner-occupiers on principal and interest start at 6.24% at Westpac, 6.29% at NAB, 6.34% at CBA and 6.5% at ANZ. The lowest fixed rate among the majors has climbed to 6.69%. NAB has lifted fixed rates twice in three weeks. CBA and Westpac have added as much as 0.48 and 0.45 percentage points respectively.
Lenders price fixed loans off expected funding costs over the term, not just today’s cash rate. When fixed rates jump this quickly, the market is pricing in a decent chance of more tightening. It is a signal, not a certainty.
In plain English
A fixed rate is a lender’s best guess at the average cash rate over the term, plus a margin. If you fix, you are betting the actual path comes in higher than that guess.
The forecasters themselves are split. ANZ and Westpac economists expect another rise in November to 4.85%. CBA and NAB see 4.6% as the peak. One comparison-site analyst warns the cash rate could finish the year at 4.85%. Commentary has divided along predictable lines: one camp reads rising fixed rates as proof that more hikes are coming, the other treats them as lenders protecting their margins. Neither side can be tested until the next decision.
Working out the break-even
The break-even is simple in principle. Fixing at 6.69% beats a variable loan at 6.24% only if variable rates rise enough, on average over the fixed term, to close that 0.45 point gap and then some.
Here is a rough way to think about it, using the figures above:
- Fixed at 6.69% versus variable at 6.24% means variable needs to average about 0.45 points higher than today across the term for fixing to win.
- If the cash rate rises once more to 4.85%, that is a 0.25 point move. On its own, that would not close the gap.
- Fixing pays off only if there are further hikes beyond that, or if the new variable rate stays elevated long enough.
- If rates peak at 4.6% and then ease, the borrower who fixed has paid a premium for certainty that never paid back.
That is a rule of thumb, not a forecast. Rates also move during the fixed term, so the real comparison depends on when each rise lands.
Who is most exposed to the next move
Not every borrower carries the same risk if the cash rate keeps rising.
- Recent buyers on thin buffers. They stretched to qualify and have little room for another step up in repayments.
- Borrowers who already fixed at lower rates. They are protected until expiry, then face a reset into a much higher rate.
- Variable-rate borrowers with no offset or savings buffer. Every rise flows straight into the monthly budget.
- Investors with negative cashflow. Higher interest costs hit them directly, and rents may not keep up.
Timing matters too. Notice periods are 20 days at CBA and 30 at the other majors, so higher repayments may not bite for two to three months. Variable-rate customers should expect the higher pricing from 9 October 2026.
The catch with fixing now
Locking in after fixed rates have already jumped means you are buying certainty at a high price. If the cash rate tops out at 4.6%, as some bank economists expect, you may sit above the variable rate for the term. Break costs are another risk, since leaving a fixed loan early can be expensive if rates fall.
More than 40 smaller lenders have passed on the full rise. The lowest announced variable rate is 5.94% and the average is projected near 6.49%. That spread is worth checking before assuming the big four offer the best deal. For more on how the cash rate flows into repayments, see our guide to RBA interest rates and mortgage repayments.
Splitting the loan
There is a middle path. Fixing part of the loan caps the damage if rates rise further, while keeping the rest variable preserves flexibility and offset access. It will not win the bet outright, but it limits how wrong you can be.
What to do before the next decision
Calculate your repayment at 4.85% before the next RBA meeting. If that number breaks your budget, you have a risk problem that a fixed rate may only delay. Struggling borrowers should contact their lender early, and the National Debt Helpline on 1800 007 007 is available.
Subscribe to the newsletter for rate updates as they land.
General info, not financial advice.
