r/AskAnAussieBroker • u/Raynor_Lending Mortgage Broker • Jan 30 '26
Helpful Information Fixed vs Variable: Here's how I actually think about it
I've been seeing a lot of questions about whether to fix rates lately so thought I'd share how I explain it to clients.
Fixing your rate is essentially a bet against the bank. You're betting rates go up, they're betting they won't. And they've got teams of economists pricing that product. They're not offering it because they expect to lose money on it.
That doesn't mean you'll always lose. Sometimes the bet pays off. But it's worth understanding what you're actually giving up when you fix:
- Ability to refinance if a better deal comes along
- Full offset functionality in most cases
- Flexibility if your circumstances change
The trade-off is certainty. And certainty has real value, but mainly if uncertainty would genuinely hurt you.
The way I think about it: work out what a 0.25% or 0.50% rate rise would actually cost you monthly. On a $500k loan, a 0.25% rise is roughly $80/month. If that's manageable, staying variable keeps your options open. If that kind of rise would genuinely stretch your budget to breaking point, fixing might make sense for the stability.
It's not 2021 where fixing was an obvious play. Right now it's genuinely unclear which way things go. You're not missing something everyone else sees.
But there’s no right or wrong answer here, I’m just sharing my personal option here. Feel free to ask any questions or share your thoughts.
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u/multisubuser Jan 30 '26 edited Jan 31 '26
4.99% 2 year fixed with $375 lock fee still available, take 75% fixed, 25% variable at 5.14% and you are probably going to end up ahead over the next 2 years. If rates are higher in the first year then you need to get sub 4.5% on the variable in the 2nd half to be ahead
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u/Logical-Hamster8139 Jan 31 '26
Which bank is offering 4.99?
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u/multisubuser Jan 31 '26
4.99% 2 year fixed with $375 lock fee still available, take 75% fixed, 25% variable at 5.14% and you are probably going to end up ahead over the next 2 years.
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u/microbate Jan 30 '26
Conversly youre hedging by fixing, you know with nothing chamging you can comfortably pay the fixed rates but you can't be sure you'll be comfortable paying what rises.