Last reviewed September 2026 by Megan Birot, Content Editor, OurTop10. Figures checked against the sources named in the article.What changed (27 September 2026): added current big four rates, a dollar comparison on a $600,000 loan, and the latest OurTop10 Rate Prediction Index reading ahead of the 29 September RBA decision. We will update this page after the decision.
Key points
- At all four major banks, the cheapest two-year fixed rate is now higher than the cheapest variable rate, by 0.24 to 0.75 percentage points.
- On a $600,000 loan, fixing with NAB for two years costs about $118 a month more than its variable rate today. Fixing only comes out ahead if the cash rate rises twice or more in that time.
- At Westpac the gap is wider. Its two-year fix would need roughly four rate rises in two years to beat its own variable rate.
- The lowest variable rate we found at any lender is 5.89% (Unloan, CommBank’s online-only brand, up to 80% LVR). That is about $77 a month less than the cheapest big four rate on a $600,000 loan.
The fixed or variable question is really a question about what you would do if rates moved against you. The cash rate has sat at 4.35% since the Reserve Bank held in August 2026, owner-occupier variable rates are running between about 5.7% and 6.5%, and the next decision is due on 29 September. Lenders are pricing their fixed rates on where they think that goes, not on where it is today.
So the choice is not “which rate is lower”. It is whether you are paying for certainty, paying for flexibility, or splitting the loan and paying a little for both.
As at 25 September 2026, the OurTop10 Rate Prediction Index puts the chance of a rate rise at 85.1%, and 8 of the 10 economists on its panel expect a rise. The cash rate is 4.35%. That is the number to have in mind before you fix. See the full index.
Big four fixed and variable rates compared
Lowest advertised owner-occupier rates, principal and interest repayments, 70% to 80% loan-to-value ratio.
| Bank | Lowest variable | Lowest 2-year fixed | Fixed costs extra |
|---|---|---|---|
| Westpac | 6.09% (6.10% comparison) Flexi First Option, online offer | 6.84% (6.93% comparison) with $395 a year package | +0.75% |
| CommBank | 6.14% (6.27% comparison) Digi Home Loan, online only | 6.82% (8.19% comparison) with $395 a year Wealth Package | +0.68% |
| NAB | 6.19% (6.32% comparison) Tailored Home Loan, from | 6.49% (7.01% comparison) Tailored fixed | +0.30% |
| ANZ | 6.25% ANZ Plus, refinancers only | 6.49% (7.09% comparison) up to 80% LVR | +0.24% |
| Lowest at any lender | 5.89% (5.80% comparison) Unloan, CommBank’s online-only brand, up to 80% LVR | n/a | 0.20% below the cheapest big four variable |
Sources: westpac.com.au (page updated 7 September 2026), commbank.com.au (fixed rates effective 22 September 2026, Digi rates effective 15 May 2026), nab.com.au (correct as at 23 September 2026), anz.com.au (ANZ Plus rate as at 15 May 2026), savings.com.au (ANZ fixed, September 2026; lowest variable at any lender, as at 27 September 2026). Comparison rates are calculated on $150,000 over 25 years. WARNING: a comparison rate is true only for the example given and may not include all fees and charges.
Two things stand out. The banks have been lifting fixed rates ahead of the cash rate, which is what lenders do when they expect a rise. And the cheapest variable rates at Westpac and CommBank are online-only offers, so the rate a branch quotes you may be higher. Look past the big four and the cheapest variable rate we found was 5.89%, which on a $600,000 loan is about $77 a month, or $925 a year, less than the cheapest big four rate.
What fixing costs in dollars
We ran a $600,000, 30-year loan through NAB’s and Westpac’s lowest rates for two years. The table shows how much more or less interest the variable loan costs than the fixed one, depending on how many 0.25% rises arrive in that time and are passed on in full.
| Cash rate rises over 2 years | NAB: variable vs fixed | Westpac: variable vs fixed |
|---|---|---|
| None | Variable saves $3,607 | Variable saves $9,021 |
| One | Variable saves $601 | Variable saves $6,015 |
| Two | Fixed saves $2,278 | Variable saves $3,137 |
| Three | Fixed saves $4,775 | Variable saves $640 |
| Four | Fixed saves $6,765 | Fixed saves $1,350 |
OurTop10 calculation, 27 September 2026. Assumes the first rise applies from October 2026, repayments reset after each change, no fees, no extra repayments. Monthly repayments today: NAB $3,671 variable vs $3,788 fixed; Westpac $3,632 variable vs $3,928 fixed.
So the answer changes by bank. At NAB, a two-year fix is a fair bet if you think the RBA will move twice. At Westpac, you are paying a lot for certainty. Each 0.25% rise adds roughly $98 a month to a $600,000 variable loan at NAB’s rate. Our loan repayment calculator will run your own numbers.
How a fixed rate works
You lock the interest rate for a set term, usually one to five years. Your repayment does not move for that whole period, whatever the Reserve Bank does. At the end of the term the loan rolls onto the lender’s standard variable rate, which is nearly always higher than the rate a new customer would be offered, and that is the moment to refinance or renegotiate.
What you give up in exchange for the certainty:
- Extra repayments are capped. Most fixed loans allow somewhere around $10,000 a year above the minimum. Go over it and you pay a fee.
- Offset accounts are rare. A handful of lenders offer a partial offset on a fixed loan. Most offer none. If you plan to keep savings against the loan, this matters more than the rate.
- Leaving costs money. Sell the property, refinance, or pay the loan out inside the fixed term and the lender charges a break cost. It is calculated on how far rates have fallen since you fixed and how long is left, and it can run to thousands of dollars.
- The rate can move before settlement. Fixed rates are set at settlement, not application. A rate lock fee, typically a few hundred dollars or a small percentage of the loan, holds the rate you were quoted for up to 90 days.
How a variable rate works
The rate moves with the market, mostly when the Reserve Bank changes the cash rate and the lender passes it on, though lenders can and do move independently. Your repayment changes when the rate does.
In return you keep the features that pay off a loan faster: unlimited extra repayments, a full offset account, redraw, and the ability to refinance to a sharper deal without a break cost. Variable loans usually start with a lower rate than the equivalent fixed loan too, because the lender is not carrying the risk of rates rising.
The cost is exposure. When the cash rate rose 13 times between May 2022 and November 2023, a $600,000 variable loan went from around $2,500 a month to about $4,000. Borrowers who had fixed in 2021 did not feel it until their terms ended.
The split loan: fix the part you cannot afford to lose
A split loan puts part of the debt on a fixed rate and the rest on variable. The fixed portion protects the repayment you could not absorb if rates rose; the variable portion keeps the offset, the redraw and the unlimited extra repayments.
A common structure for a first home buyer is 50/50 or 60/40 fixed to variable, but the right split comes from the budget, not a rule of thumb. Work out the repayment you could carry if rates rose by 1 or 2 percentage points, then fix enough that the rest of the loan would still be affordable at that level.
Fixed vs variable in 2026: the honest comparison
Rate today. Variable is usually lower at the start. At the big four, the cheapest two-year fixed rates now sit 0.24% to 0.75% above the cheapest variable rates, which tells you lenders expect rates to rise.
If rates fall. Variable borrowers benefit as soon as the lender passes it on. Fixed borrowers keep paying the fixed rate until the term ends, and pay a break cost to get out early.
If rates rise. Fixed borrowers are protected for the term. Variable borrowers pay more from the next repayment.
Features. Variable wins, and it is not close. If you expect to hold $20,000 or more in savings against the loan, a full offset on a variable rate usually beats a slightly lower fixed rate without one.
Selling or refinancing. Variable lets you leave whenever you like. Fixed charges you to leave early.
Which one suits a first home buyer
Fix, or split heavily towards fixed, if the repayment is already near the top of what you can carry, if your income is steady but not growing, or if you simply will not sleep with a moving repayment. That is most buyers using the 5% deposit scheme, who are borrowing 95% of the price.
Stay variable if you have a buffer in your budget, if you plan to make extra repayments, if you will keep savings in an offset, or if you might sell or refinance inside the next few years.
And whatever you choose, diary the end of any fixed term. The revert rate is where lenders make their money from people who forget.
Fixed vs variable comparison
Compare what you would pay over a fixed term against staying variable, using your own view of where rates go. Change the expected variable rate to see when fixing wins.
Built by OurTop10. Results are estimates for comparison only and are not credit advice. Figures stay in your browser and are not sent anywhere.
What to do next
Run both repayments through our calculators at today’s rate and at 1 percentage point higher, then read the guide to the best home loans for first home buyers for the features worth paying for. If you want a broker to price the split across a lender panel, our ranked lists for Sydney and Melbourne are reviewed regularly.
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FAQs
Is it better to fix or go variable in 2026?
It depends on your budget, not on a rate forecast. With the cash rate at 4.35% and big four fixed rates now 0.24% to 0.75% above their variable rates, fix if a rise would break the budget and stay variable if you want the offset and the freedom to leave. A split covers both.
How long can I fix a home loan for?
One to five years with most lenders. Two and three year terms are the most common. Longer terms carry a bigger risk of being stuck above the market if rates fall.
What happens when my fixed rate ends?
The loan rolls onto the lender’s standard variable rate, which is usually higher than the rate offered to new customers. Refinance, re-fix or ask for a better rate before the term ends, not after.
Can I make extra repayments on a fixed loan?
Usually up to a cap, often around $10,000 a year. Above that the lender charges a fee. Variable loans allow unlimited extra repayments.
What is a break cost?
The fee a lender charges if you pay out, refinance or sell inside a fixed term. It reflects the interest the lender loses if rates have fallen since you fixed, so it is largest when rates have dropped and there is a long time left on the term.
Can I have an offset account on a fixed rate loan?
Rarely, and usually only a partial one. If you plan to keep savings against the loan, put that portion on the variable side of a split.
Sources
- Reserve Bank of Australia, cash rate target: rba.gov.au/statistics/cash-rate
- Westpac, home loan interest rates: westpac.com.au
- CommBank, fixed rate home loans: commbank.com.au; Digi Home Loan: commbank.com.au
- NAB, home loan interest rates: nab.com.au
- ANZ, ANZ Plus home loan: anz.com.au; ANZ fixed rates reported by savings.com.au
- OurTop10 Rate Prediction Index: ourtop10.com.au/rba-index
Megan Birot
Content Editor, OurTop10
Megan Birot is OurTop10’s Content Editor. She holds a Certificate IV in Finance and Mortgage Broking (FNS40821) and a Diploma of Finance and Mortgage Broking Management (FNS50322), and checks every guide on the site against current lender policy, government scheme rules and state revenue office thresholds before it goes live.
She also runs the editorial reviews on OurTop10’s broker, accountant, conveyancer and buyer’s agent shortlists, and writes all the media releases for the OurTop10 Reports.