Every week someone asks me the same question: Should I fix my rate or stay variable? It sounds simple. It is not. And in 2026, with the rate environment finally shifting after a brutal few years, the answer matters more than ever.
I am a mortgage broker based in Sydney. I talk to borrowers across the Inner West, Northern Beaches, Western Sydney, and the Hills District every week. The anxiety around this decision is real — and understandable. So let me give you a straight answer, without the bank marketing spin.
First, What is Actually Happening With Rates?
The RBA held the cash rate steady for most of 2025 after a series of hikes that pushed many Sydney borrowers to their limits. In 2026, we have seen some relief — a couple of cuts have come through, and the market is pricing in at least one more before the end of the year.
That context matters enormously when you are deciding between fixed and variable. A year ago, locking in a rate made more sense defensively. Today, the calculus has changed.
Variable rates from competitive lenders are sitting in the high 5% to low 6% range depending on your LVR, loan size, and lender. Fixed rates for 1–3 year terms are clustered around 5.5%–6.2%. The gap has narrowed — which is exactly why this decision is trickier than it looks.
The Case for Variable in 2026
If rates continue to fall — even one or two more cuts — you benefit automatically on a variable rate. You do not have to do anything. Your repayments drop, your offset account works harder, and you stay flexible.
Variable loans also come with features that fixed loans do not: unlimited extra repayments, full offset accounts, and the ability to refinance without break costs if a better deal comes along. For Sydney borrowers with fluctuating income — tradies, business owners, commission-based salespeople — that flexibility is worth real money.
If you have a solid offset balance — say $50,000 or more sitting against a $700,000 loan — that money is actively reducing the interest you pay every single day. Fix your rate and you often lose that offset benefit entirely. On a $700k loan with $60k in offset, you are saving around $3,500–$4,000 a year in interest. Giving that up for rate certainty is a real trade-off most people do not calculate.
The Case for Fixed in 2026
There are still genuine reasons to fix. If you are on a very tight budget and a rate rise would genuinely stress your household finances, fixing gives you certainty. You know exactly what your repayment will be for the next 1, 2, or 3 years. No surprises. For families in mortgage stress, that peace of mind is not nothing.
First home buyers in particular sometimes benefit from fixing for 1–2 years while they get their feet under them. You have just stretched your budget to get into a Sydney property — the last thing you need is your repayments jumping $300 per month because the RBA decided to move unexpectedly.
The risk, of course, is that rates keep falling and you are stuck paying more than you need to. Fixed rate break costs in Australia can be substantial — sometimes tens of thousands of dollars — so once you fix, you are generally committed.
The Split Loan Option Most People Overlook
Here is what I actually recommend for most Sydney borrowers right now: split the loan.
Fix 30–50% of your loan balance to lock in certainty on a portion of your debt. Keep the rest variable so you can make extra repayments, use your offset account, and benefit from any further rate cuts.
Example: You have a $900,000 loan. You fix $300,000 at 5.79% for 2 years and keep $600,000 variable at 5.89% with a full offset account. You get certainty on a chunk of your debt. You keep flexibility on the majority. If rates fall another 0.5%, you feel it on $600k. If they somehow rise, you are insulated on $300k. It is not perfect — nothing is — but it is a sensible middle ground.
What I Tell My Sydney Clients Right Now
For most borrowers with a decent offset balance and stable income: stay variable, or consider a split. The rate environment is moving in your favour and locking in now means you may miss the next cut.
For borrowers with very tight cash flow, minimal savings buffer, or genuine financial stress: fixing for 1–2 years may buy you breathing room. Just be honest with yourself about whether you can absorb a break cost if circumstances change.
For investors with multiple properties: the answer almost always depends on your depreciation strategy, cash flow position, and how aggressively you are building your portfolio. This is not a one-size-fits-all situation — which is exactly why a broker conversation is worth having before you make the call.
One Thing I See Go Wrong Constantly
Borrowers go directly to their bank, ask should I fix or stay variable, and the banker gives them an answer based on what products their bank is currently pushing. That is not advice — that is sales.
A good broker compares rates across 30+ lenders, runs the actual numbers on your specific loan balance and offset position, and tells you what makes sense for your situation — not what is easiest for the lender to sell. The bank has one interest rate. We have dozens. The difference on an $800,000 loan can be $400–$600 per month.
Ready to Work Out What Is Right for You?
If you are sitting on a rate that has not been reviewed in 12+ months, you are almost certainly overpaying. Whether you are leaning fixed, variable, or split — we can run the numbers and show you what the actual options look like across the market.
Call us on 1300 855 155 or fill in the form below. No obligation. Just a straight conversation about what is actually available to you right now.
