Interest Rates After the Latest RBA Decision: Fix or Variable?

The Reserve Bank of Australia's latest decision to cut the cash rate continues the easing cycle that began in early 2025. With the cash rate now sitting lower than it has been in several years, borrowers are faced with a critical strategic question: should you fix your mortgage rate now, or stay variable and benefit from potential further cuts?

Where Rates Stand Now

Following the most recent RBA meeting, the cash rate has been reduced to levels not seen since the pre-inflation surge era. Most major lenders have passed on the full cut to variable rate customers, with competitive variable rates now available in the high 5% to low 6% range for owner-occupiers with strong equity positions.

Fixed rates, which typically price in expectations of future rate movements, have also come down — 1 and 2-year fixed rates are now broadly competitive with variable rates, while 3 and 5-year fixed products remain slightly higher, reflecting uncertainty about where rates will be over the medium term.

The Case for Staying Variable

• Further cuts are expected: Most major bank economists forecast 1–2 more rate cuts in 2026, which would benefit variable rate holders directly
• Flexibility matters: Variable loans allow unlimited extra repayments and typically include offset accounts
• No break costs: If your circumstances change and you need to sell or refinance, variable loans have no early exit penalties

The Case for Fixing

• Certainty in your budget: A fixed rate locks in your repayment for 1–5 years, protecting you from any unexpected rate rises
• Rates may not fall much further: If the economy picks up or inflation rebounds, the RBA could pause or even reverse the easing cycle
• Peace of mind: For borrowers at the edge of their serviceability, certainty is valuable

What About a Split Loan?

A popular middle-ground is to split your loan — for example, fixing 50–60% and leaving the remainder variable. This gives you partial protection against rate rises while still allowing you to benefit from cuts on the variable portion.

Our Recommendation

There's no single right answer — it depends on your loan size, risk tolerance, and financial goals. With rates having moved significantly, now is an excellent time to review your current loan. A Loan Rocket broker can model the numbers for your specific situation and help you decide the right approach.