Fixed vs Variable Rate: Which Suits You?
A plain-English comparison of fixed and variable home loan rates in 2026 — including split loans, offset accounts, and when each option suits different buyers.
One of the first calls every home loan borrower makes is fixed, variable, or split. There’s no universal right answer — but there are clear trade-offs.
Fixed rate loans
Your interest rate is locked for a set period, typically 1–5 years.
Pros
- Certainty of repayments — budgeting is easy
- Protection if rates rise during the fixed period
Cons
- Limited or no offset / redraw features on many fixed products
- Break costs if you need to exit early (can be substantial)
- Extra repayments usually capped
- No benefit if rates fall
Variable rate loans
Your rate moves up and down in line with the market and your lender’s pricing decisions.
Pros
- Full features — offset, unlimited extra repayments, redraw
- Benefit immediately when rates drop
- Flexibility to refinance without break costs
Cons
- Repayments can rise if rates increase
- Harder to budget precisely
Split loans — the middle path
You divide your loan into two portions: one fixed, one variable. Many Perth borrowers find this balances certainty with flexibility.
Example approach
- 60% fixed for 2–3 years — repayment certainty
- 40% variable with offset — use savings to reduce interest
Who fixed typically suits
- First home buyers with tight budgets who need certainty
- Borrowers who think rates will rise during the fixed period
- People who won’t need to sell or refinance in the fix window
Who variable typically suits
- Borrowers with significant savings to park in offset
- People who may sell, refinance or make lump-sum payments
- Investors valuing flexibility
What we actually do
For every client, we model the repayment impact at today’s rates, plus a 1% and 2% stress-test, across fixed, variable and split structures. You pick the option that lets you sleep at night — no one-size-fits-all.
Talk to us about your rate structure →
This article is general information only and does not take into account your personal circumstances. Consider whether it is appropriate to you, and seek professional advice before acting on it.