Fixed, variable, or split before the 5 May RBA decision? What Australian homeowners should actually compare (April 2026)

By Bishnu Adhikari, mortgage broker and director, Azure Home Loans — Friday, 24 April 2026.

The question has changed. For most of 2025 it was "how much will rates fall?" For the last eight weeks it has become something very different, and much more urgent: should I fix my home loan before the RBA hikes again on 5 May?

Three of the four major banks — CBA, NAB and Westpac — are forecasting a third consecutive 25-basis-point hike on Tuesday 5 May, taking the cash rate from 4.10% to 4.35%. Westpac goes further and pencils in two more hikes after that, peaking at 4.85% by August. Only ANZ is calling a hold, pointing to the narrow 5–4 vote at the March meeting. Markets are pricing roughly a 60–62% chance of a hike.

In the meantime, I've had more conversations about fixing in the last four weeks than I had across all of 2025. Most of them start the same way: "I keep hearing fixed rates are under variable — is it a trap, or should I lock in now?"

This is the honest answer. Real numbers. How market pricing actually works. The three options you genuinely have. A worked scenario for a $620,000 owner-occupier in Brisbane. And the questions I ask every client before we decide, because the right answer here is rarely the same for two households.

Why you should keep reading: this decision locks in — or doesn't — your repayments for up to five years. Getting it wrong can cost $10,000–$30,000 in break costs if you need to exit early. Getting it right can save the same. There is no substitute for understanding the mechanics before you sign.

What's actually happening with rates in Australia right now

Let me put all the numbers on one table, as at the week of 21–25 April 2026, so the rest of this article sits on real ground.

Two things jump off that table.

First, fixed rates are sitting slightly under typical variable rates. The best 2-year fixed at a small mutual is 5.46%; the best variable is 5.44%. At the major banks the gap is larger — fixed is roughly 0.30–0.40% below their standard variable. That feels like free money. It is not. It is market pricing.

Second, the range between "lowest" and "typical" is enormous — over 1.30% for variable. A $600,000 loan at 5.44% costs $3,380 a month. The same loan at 6.80% costs $3,911. That's $531 a month, $6,370 a year, $191,000 over thirty years, between two variable rates for the identical borrower. Most people leave that money on the table because they never push.

The single most misunderstood thing about fixed rates

When a lender advertises a 2-year fixed rate at 5.89%, that number is not a discount. It is not a marketing ploy. It is the lender's best forecast — drawn from the wholesale market — of where the average variable rate will sit over the next 24 months.

If the market believes the RBA will hike once in May and then hold flat for two years, the 2-year fixed rate will price in exactly that: a slightly higher variable rate now, dropping gradually back. If the market believes the RBA will hike three times this year and then cut sharply in 2027, the 2-year fixed rate will price that in too. The fixed rate you're offered today is already absorbing the May decision.

Put differently: you are not buying a lower rate when you fix. You are buying certainty. The question is whether certainty is worth the premium — and whether the market's forecast turns out to be roughly right.

If the market is right, fixed and variable end up costing you close to the same amount over the fixed term, with variable usually pipping fixed by a small margin (because of the lender's profit spread built into the fixed number).

If the market is too optimistic — rates go higher than expected — fixed wins.

If the market is too pessimistic — rates rise less than expected, or fall — variable wins.

Nobody knows which way this will land. Not the RBA. Not the big four. Definitely not me. The decision therefore should be about your household's tolerance for uncertainty, not a bet on whether the RBA outsmarts the market.

Your three realistic options — and who each one suits

Option 1: Stay variable

You keep the loan you have (or pick a new variable rate). Your repayments move with the market. Pass-through from major lenders is typically in full and takes 1–2 months after each RBA decision — both directions.

Advantages: full access to offset (which can cut real interest to nothing on a dollar-for-dollar basis), unlimited extra repayments, no break costs if you refinance or sell, and — critically — immediate benefit if rates start falling again. The RBA's own projections do not see trimmed mean inflation back inside the 2–3% band until mid-2028, but forecasts drift. When rates do start coming down, variable holders ride them down straight away.

Who it suits: households with a healthy offset balance (say, more than 5% of the loan sitting in offset), borrowers with capacity to absorb another 0.50%–0.75% of hikes without stress, anyone within 2–3 years of selling or refinancing (break costs would eat the saving), and people who genuinely value optionality.

Option 2: Fix the whole loan

You lock in a rate — commonly 1, 2, 3 or 5 years — at the rate your lender offers on the day. Your repayments don't move until the fixed term ends.

Advantages: absolute repayment certainty. Critical if your budget is already stretched, if you're on a single income, or if another 0.50% would genuinely hurt. Fixed rates in April 2026 at the sharpest end of the market (Woolworths Team Bank, Move Bank, BankVic, Regional Australia Bank and a handful of other mutuals) sit below 6%, which is measurably cheaper than standard major-bank variable rates today.

Disadvantages that bite: offset accounts are usually unavailable or extremely restricted on fixed loans, extra repayments are typically capped at $10,000–$30,000 per year, and if you need to exit early — sell, refinance, pay out — break costs apply. On a $600,000 loan with 18 months remaining and a 1% market rate move, break costs can reach $3,000–$15,000. This is not a theoretical risk; it is the single biggest reason fixed-rate borrowers regret fixing.

Who it suits: first home buyers at or near their borrowing limit, single-income households, anyone who would lose sleep over two more hikes, and borrowers whose savings aren't sitting in offset earning real interest.

Option 3: Split the loan

You fix part of the loan and keep part variable. Common splits are 50/50, 60/40 fixed/variable, and 70/30. Most lenders in Australia allow splits at no additional cost — it's a policy option, not a product.

This is the option that I find massively under-discussed. Done well, a split gives you the best of both: the variable portion keeps your offset working and can be repaid aggressively, while the fixed portion insulates a chunk of your debt from the next two hikes.

The structure most of my clients end up with when rates are uncertain and offset is useful:

• 60% fixed for 2 years (the "sleep at night" portion — rate certainty for the majority of the debt).
• 40% variable with a 100% offset (the "real savings sit here" portion — offset balance, bonus income, tax refunds and emergency buffer all reduce interest daily).

On a $600,000 loan, that's $360,000 fixed at, say, 5.89%, and $240,000 variable at 6.20%. The blended rate is 6.01%. You pay more than pure fixed, less than pure variable if the RBA does hike twice more, and you keep your offset working on a meaningful slice of the debt. More importantly, you hedge — you won't be fully wrong regardless of which way rates move.

Split loans are not a compromise. They are, for a very large number of households in 2026, the structurally correct answer.

A worked scenario: Sarah and Tom, $620,000 in Brisbane

Let me put real numbers on this. Sarah and Tom are a couple in their mid-thirties living in northside Brisbane. Combined income around $185,000, two young children, one recent car loan paid off. They bought in 2023 at 5.99% variable; today their rate is 6.49% variable after the February and March 2026 hikes passed through in full. Outstanding balance is $620,000, remaining term 27 years, roughly $12,000 in offset.

Their current monthly repayment is approximately $4,027 on a principal-and-interest basis.

If the RBA hikes once in May to 4.35% and lenders pass it on in full, their new variable rate becomes 6.74%, taking monthly repayments to roughly $4,139 — an additional $112 a month. If Westpac's more hawkish scenario plays out (two more hikes through to August), their rate reaches 7.24% and monthly repayments climb to roughly $4,367 — an extra $340 a month from where they sit today.

Here's what the three options actually look like on their numbers:

Notice what actually moves the number. Shopping the variable rate from 6.49% to 5.75% saves $310 a month on its own — $3,720 a year — without fixing anything. That is not a typo. Lenders rarely offer their best rate to existing customers; they offer it to new customers. A broker review or an honest retention call to your lender is almost always the first move, regardless of whether you end up fixing.

After that, fixing buys Sarah and Tom rate certainty for two years at a number ($3,777) that's only $60 a month more than the sharpest variable. For a couple with two kids and tight cash flow, that's a very fair price for predictability. The split approach saves another $25 a month while keeping offset working on 40% of the loan — genuinely the middle path.

For Sarah and Tom, I'd walk them through all three and the decision almost always comes down to a single question: do you want the $12,000 in offset to keep working as hard as possible, or would you rather trade that flexibility for locking in 60% of the debt at a known number? There is no universal right answer. For this household, knowing them, a 60/40 split is where we'd most likely end up.

This is an illustrative scenario — not a quote. Real repayments depend on the exact rate your lender offers, fees, LVR, and lender policy.

When fixing genuinely makes sense — and when it doesn't

Fix if any of these apply

• Your monthly budget is already tight and another 0.50%–0.75% of rate rises would force painful changes.
• You're on a single income, or one income is uncertain.
• You recently bought at or near your borrowing capacity — you have limited buffer.
• You don't have a meaningful offset balance (say, less than 3–5% of the loan).
• You value predictability enough that you'd sleep better knowing the number doesn't move.
• You can honestly commit to not selling or refinancing before the fixed term ends.

Stay variable if most of these apply

• You have $20,000+ in offset already, or you're building toward that.
• You make regular extra repayments (more than $10,000 a year beyond the minimum).
• You might sell, upsize, downsize, or refinance within the fixed term you're considering.
• You have solid income stability and can absorb further rate movement.
• You believe the RBA will either hold or cut within the next 12–18 months (the market currently gives this a 40% weighting).

Consider a split if

• You're genuinely torn between the first two — which in my experience is most people.
• You have a useful offset balance but also tight monthly cash flow.
• You want certainty without giving up all flexibility.
• You have lumpy income (bonuses, tax refunds, overtime) that benefits from sitting in offset.

What most people forget about fixed loans

This is where I earn my keep. Five things that catch fixed-rate borrowers out, in rough order of how often I see them:

1. Break costs are real and non-trivial. If you need to get out of a fixed loan early — for a separation, a job move, an inheritance that lets you pay the loan out, or simply to refinance because rates dropped — break fees can run to $3,000–$15,000 on a $600,000 loan with 12–24 months remaining. They are not a penalty; they are a present-value calculation of the lender's lost margin. They're bigger when rates have fallen a lot since you fixed. Always model this scenario before locking in.
2. Offset is usually off the table. Most fixed loans either don't have offset at all, or offer a limited "fixed rate offset" that isn't 100% or has a cap. If your offset balance is meaningful, the lost interest saving from fixing that portion often wipes the headline rate advantage.
3. Extra repayments are capped. Typical limits are $10,000, $20,000 or $30,000 per year above the minimum. If you're planning to throw a tax refund, bonus, inheritance or business windfall at the loan, fixed can prevent you from making that move efficiently.
4. Rate lock fees exist. If the fixed rate you want might move between application and settlement, many lenders offer a "rate lock" for a fee — usually $395–$795. Worth paying in a moving market; surprising when it's not discussed upfront.
5. Fixed rates rarely roll onto competitive variable. When your fixed term ends, the lender's default "revert rate" is almost always uncompetitive. You must proactively refinance or renegotiate at that point, or you're donating money. Most people forget.

A broker's 6-point checklist before you decide

Before you call your current lender or sit down with a broker this week, have these six numbers or facts ready. They are what actually drive the decision.

1. Current loan balance and interest rate (including whether it's investor, owner-occupier, P&I, or interest-only).
2. Current offset balance (this single number changes the answer more than anything else).
3. Remaining loan term in months.
4. Household monthly cash surplus — income minus fixed outgoings minus current mortgage. If it's under $1,000 a month, fix. If it's over $3,000 and growing, variable is probably fine.
5. Expected life events in the next 2–3 years — baby, property move, business change, inheritance, school fees spike, parental support. Any of these can change the right answer.
6. Your honest risk tolerance — if two more hikes kept you up at night, that's your answer regardless of the math.

Quick sanity check using our calculator

Before you make the call, the repayment calculator on this site now supports monthly, fortnightly and weekly frequencies — you can plug in the fixed rate you've been quoted, compare against your current variable, and see what the gap is in dollars. It's a back-of-envelope view, not a replacement for a proper fit-for-purpose conversation, but it stops the decision being abstract.

Summary — what I'd actually do this week

If I had my own home loan up for renewal or review this week:

1. Ring your current lender. Ask what their best variable rate is for a customer in your LVR band. If they drop you under 5.80%, the first part of the conversation is won without doing anything structural.
2. Get a side-by-side written quote for your specific LVR on: best variable, best 2-year fixed, best 3-year fixed. That's what you actually compare.
3. Decide whether offset matters to you — have an honest look at your savings and spending pattern. If offset doesn't change anything, fixed is cleaner. If it changes a lot, variable or split matters more.
4. Decide on 1, 2 or 3 years if you fix. Two years is the sweet spot right now: covers the expected peak plus a first cut, doesn't lock you in too long. Three years only if you genuinely want the certainty and your life is stable.
5. If you're split-minded, ask specifically for a 60/40 split with 100% offset on the variable portion.
6. Model break costs on the fixed portion against a scenario where rates cut by 1% in 18 months. If break costs would swallow the benefit of refinancing, that answers the split question for you.

If you want a second pair of eyes on your specific situation before you walk into your lender, send a quick enquiry or call 0400 77 77 55 — I review the numbers across 40+ Australian lenders and tell you, plainly, what the trade-off looks like on your file. No upfront fee, and we only proceed if the sum stacks up.

Frequently asked questions

Should I fix my home loan before 5 May 2026?

The honest answer is it depends on your household. Three of the four major banks are forecasting a hike to 4.35%, and that forecast is already priced into today's fixed rates — so fixing doesn't automatically avoid the hike. Fix if budget certainty matters more than offset flexibility. Stay variable if you have meaningful offset savings and can absorb one or two more hikes. Consider a 60/40 split if you're torn. The decision is about your household, not a bet on the RBA.

Why are fixed rates lower than variable right now?

Because fixed rates reflect the market's forecast of the average variable rate over the fixed term — not today's rate. Markets are pricing in one more hike and then a pause, followed by modest easing through 2027. Fixed rates already have that path priced in. You are not getting a discount; you are paying a premium for certainty that is sometimes worth it and sometimes isn't.

What happens if I fix and rates fall more than expected?

You stay locked in at your fixed rate. Variable borrowers benefit immediately from cuts; fixed borrowers don't. If you want to exit your fixed loan to get a better rate, break costs apply — and they can be significant when rates have fallen a lot. On a $600,000 loan with 18 months remaining and a 1% market rate drop, break costs commonly land in the $3,000–$15,000 range. This is the single biggest risk of fixing.

What is the best fixed rate in Australia right now?

As at late April 2026, the sharpest 2-year fixed rate on the Canstar and Money.com.au databases is 5.46% p.a. from Woolworths Team Bank, at up to 80% LVR, followed by Move Bank, BankVic, Pacific Mortgage Group and Regional Australia Bank in the 5.49%–5.64% band. Major-bank 2-year fixed rates are typically 5.89%–6.19%. Your actual rate depends on LVR, loan amount, security type and lender policy — rate snapshots from Money.com.au update as lenders reprice, so confirm on the day.

Can I make extra repayments on a fixed home loan?

Yes, but usually with an annual cap. Most Australian fixed loans allow $10,000–$30,000 per year in extra repayments above the minimum. Go over the cap and break fees typically kick in. If you regularly make extra repayments or throw windfalls at the loan, this is a strong argument against fixing the whole loan.

What is a split home loan and how does it work?

A split loan divides your mortgage into two (or more) parts — commonly one part fixed, one part variable. You pay the fixed rate on the fixed portion and the variable rate on the variable portion; repayments blend. Most lenders allow splits at no additional cost. The variable portion typically retains offset and extra-repayment flexibility, while the fixed portion provides certainty. A 60% fixed / 40% variable structure is the most common for households who want both.

How much does a 0.25% rate rise actually cost me?

On a standard 30-year P&I loan, every 0.25% on the rate adds approximately $15–$18 per month per $100,000 borrowed. So on a $600,000 loan, 0.25% adds roughly $90–$108 per month. The February and March 2026 hikes combined have already added around $165–$180 per month on the same $600,000 loan, according to AMP's Shane Oliver. A third hike in May would add another $80–$90 on top of that.

Does fixing affect my borrowing capacity for another loan?

Not materially in the assessment, because lenders assess your borrowing capacity at the current product rate plus APRA's 3% serviceability buffer — not the rate you're paying. But fixing does limit your ability to refinance or restructure if your circumstances change, and that can affect practical options if you want to buy an investment property or build.

What should I do if the RBA holds instead of hikes on 5 May?

If the RBA holds, fixed rates will likely reprice downwards (slightly) as markets reassess the probability of further hikes. Variable rates stay where they are. If you had locked in a fix at 5.89% and fixed then drifts down to 5.69% over the following weeks, you'd feel it — but the certainty is still real. If you are still deciding, a hold gives you time; a hike removes that time. This is why the week before a decision is when most of my enquiry calls come in.

When does my fixed rate end and what happens next?

At the end of the fixed term, your loan automatically rolls onto the lender's default variable "revert rate" unless you act. The revert rate is almost always uncompetitive. You should contact your lender or broker two to three months before your fixed term ends and actively negotiate or refinance. This is one of the most common expensive mistakes in Australian home lending.

References

• RBA — Monetary policy and cash rate decisions.
• RBA — Meeting schedule 2026.
• ABS — Consumer Price Index, Australia — March quarter release schedule.
• Canstar — "Lowest home loan rates by LVR in April 2026".
• Canstar — "Interest rate forecast and predictions for 2026", April 2026.
• Money.com.au — "Best fixed rate home loans in Australia", March 2026.
• Australian Broker News — "Mortgage rate hikes bite as top deals narrow for borrowers", 14 April 2026.
• Savings Mate — "Fixed vs variable mortgage 2026: which saves you more after two rate hikes".
• Lagos Financial — "Fixed vs variable rate in 2026: should you lock in before the next rate rise?".
• IBTimes Australia — "RBA rate hike predictions 2026".

Talk to a broker before you sign anything

If any of this has made your brain run three scenarios at once, that's the right reaction — it's a genuinely consequential decision. If you'd like an honest, numbers-on-one-page review of your options before you make the call, send me the details of your current loan or message me on 0400 77 77 55 (also on WhatsApp). I run the fix-vs-variable-vs-split comparison across 40+ Australian lenders on every file, and we only proceed if the sum stacks up for your household.

Related reading on this site: before the 29 April CPI and 5 May RBA — the 6-day mortgage playbook, five signs it's time to refinance, fixed vs variable in plain language, refinance savings beyond the monthly payment, offset vs redraw, and how borrowing capacity really works in 2026. Or if you're managing multiple debts on top of the mortgage question, the debt consolidation service page walks through the three-path cost model.

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Information on this page is general only and does not take into account your personal objectives, financial situation, or needs. Credit assistance is subject to lender assessment, policy, and verification — outcomes, savings, and approval are not guaranteed. Fixed rates, break costs and lender policies change frequently; confirm any figure with your lender or broker before acting. Bishnu Adhikari is a credit representative (Credit Representative 538895) of Australian Credit Licence 390261.