Fixed vs Variable Home Loan as Rates Rise: What a 0.25% RBA Move Costs You

The Reserve Bank meets on 29 September 2026 with the cash rate at 4.35%, and the big four banks all expect a rise. If you have a mortgage in Frankston, Ringwood or anywhere in between, the question our brokers are being asked every day is simple: should I fix now? This guide puts numbers on what a rate rise costs, explains what you give up when you fix, and shows why for many borrowers the better move is not fixing at all but refinancing.

Where rates are right now

As at 24 September 2026:

• •The RBA cash rate is 4.35%, unchanged since the August meeting
• •Annual inflation eased to 3.5% in July, but the RBA's trimmed mean measure is still 3.6%, above its 2 to 3% target
• •NAB, CBA and Westpac forecast a 0.25% rise to 4.60% on 29 September; ANZ expects a second rise in November to 4.85%
• •Financial markets have priced a September rise at roughly 90%
• •The average variable rate borrowers are actually paying is around 6.9%, while the sharpest new-customer variable rates start under 5.8%

That last point matters more than the RBA decision. The gap between what existing customers pay and what lenders offer new customers is often larger than a full rate rise.

What a 0.25% rise costs you each month

On a 30-year principal and interest loan, moving from 6.00% to 6.25% adds:

• •$500,000 loan: $2,998 to $3,079 a month, an extra $81
• •$600,000 loan: $3,597 to $3,694 a month, an extra $97
• •$750,000 loan: $4,497 to $4,618 a month, an extra $121

Two rises (0.50%) on a $600,000 loan add about $195 a month, or roughly $2,300 a year. Check your own loan with our loan repayments calculator.

Fixing: certainty, at a price

A fixed rate locks your repayment for the fixed term, usually one to five years. That is genuinely valuable if your budget can't absorb another rise or two. But understand what you are buying:

• •Lenders price expected rises into fixed rates. If a two-year fixed rate is already above the variable rate you could get, you are paying the insurance premium up front. Fixing only "wins" if rates rise by more than the market already expects
• •Limited extra repayments. Most fixed loans cap extra repayments (often $10,000 to $20,000 a year) and many don't allow a full offset account
• •Break costs. If you sell, refinance or pay out the loan during the fixed term and rates have fallen, the lender charges break costs that can run to tens of thousands of dollars
• •Rate lock fees. Between application and settlement the fixed rate can move; a rate lock protects you, usually for a fee

Variable: flexibility, and the option to refinance

A variable loan moves with the market, up and down. In exchange you keep an offset account, unlimited extra repayments and the freedom to refinance whenever a better deal appears. That freedom is the key point in the current market.

Consider a borrower paying 6.9% on $600,000, the current average. Refinancing to a rate of 6.2%, well within what lenders are offering good borrowers today, cuts repayments by about $270 a month. Even if the RBA lifts rates twice, that borrower is still ahead of where they started. Our refinance break-even calculator shows how quickly the savings cover the switching costs; for most loans it is a matter of months.

Splitting: the middle road

Splitting your loan between fixed and variable portions is often the most sensible answer. A common structure is to fix the part of the loan you know you won't be paying down quickly, and keep the rest variable with an offset account for savings and extra repayments. You get certainty on most of your repayment without giving up flexibility on the rest.

A Frankston example

A couple in Langwarrin with a $650,000 loan at 6.85% asked us whether to fix ahead of the September decision. Their lender's two-year fixed offer was 6.29%. Rather than fixing with that lender, we compared the market: a refinance to a 5.94% variable rate with a full offset saved them about $380 a month immediately, before any RBA decision, and they kept the ability to fix part of the loan later. The lesson is that "fix or not" is usually the wrong first question. "What is the best rate I can get today, and what structure suits my next three years?" is the right one.

What to do before 29 September

• •Find your actual rate. Not the headline rate, the one on your statement. If it starts with a 6.5 or higher, you are paying the loyalty tax
• •Ask for a repricing. A phone call to your lender, or a call from us, often produces a rate cut without refinancing at all
• •Get a refinance comparison. We compare more than 40 lenders and show you the break-even in months
• •If you do fix, fix part of the loan and ask about a rate lock while your application is processed
• •Build your buffer. Put spare cash into your offset rather than paying down principal, so it stays accessible if rates keep rising

Talk to a mortgage broker in Frankston or Ringwood East

Our brokers work in the same offices as our accountants and financial advisers, so a refinance review can also cover your investment property structure, whether an offset or redraw suits your tax position, and how your loan fits your overall plan. There is no fee for our home loan advice; we are paid by the lender you choose. Call the Frankston office on 03 9769 6431 or the Ringwood East office on 03 9870 1477, or start with our refinancing service page.

Frequently asked questions

Should I fix my home loan before the RBA meets on 29 September

Only if a fixed rate is available that is competitive with the best variable rate you could get, and your budget genuinely needs the certainty. Fixed rates already reflect expected rises, so waiting for the decision rarely changes the answer.

How much will a 0.25% rate rise add to my repayments

Roughly $16 a month for every $100,000 borrowed on a 30-year loan. On $600,000 that is about $97 a month.

Is it worth refinancing for a 0.5% lower rate

Usually yes. On $600,000 a 0.5% cut saves close to $200 a month, and typical refinance costs of $800 to $1,500 are recovered within the first year. Loans with a fixed term still running are the exception because of break costs.

Can I fix part of my loan and leave the rest variable

Yes. Most lenders allow a split, and it is often the structure we recommend for borrowers who want some certainty without losing their offset account.

Rates, forecasts and examples in this article are current as at 24 September 2026 and will change. This is general information only and does not take into account your objectives, financial situation or needs. Credit services are provided by Counting Beans A.F. as credit representatives of Outsource Financial Pty Ltd (Australian Credit Licence 384324). Consider whether the information is right for you before acting.