Home loan guide • Updated for the RBA decision on 3 February 2026
To Fix or Not to Fix? (That Is the Question) — What the 2026 RBA Rate Hike Means for Your Home Loan
The RBA lifted the cash rate by 0.25% to 3.85%. If you’re sitting on a variable rate that’s drifted into the 5.7%–5.99% range, you’re not alone — we’ve had a stack of Loan Location clients reach out asking: “Should I lock something in before the next rise?”
Quick reality check: You don’t have to fix 100%. A split loan (e.g. 50/50 fixed + variable) can give you certainty and flexibility.
What you’ll get from this guide
1) What happened: the RBA moved (again)
On 3 February 2026, the Reserve Bank of Australia increased the cash rate target to 3.85% (a 0.25% rise). For home loan holders, this usually flows into variable rates as lenders adjust pricing.
Why this matters
Even “only” 0.25% can make a noticeable difference over time — and if inflation doesn’t cool, rate pressure can stick around. That’s why people are acting before the next move, not after it.
2) Why clients are fixing now
- Variable rates drifting higher: Many borrowers are now seeing rates around 5.7%–5.99%.
- Fixed opportunities still exist: In some scenarios, we can still see fixed rates around ~5.29% for 2 years (subject to lender, policy and your scenario).
- Timing matters: If you want to refinance or restructure, doing it before another hike can help (serviceability and lender pricing can shift quickly).
Important
Rates are indicative and change often. Your actual rate depends on loan size, LVR, product type, features (offset), and lender policy. We’ll confirm what’s real for your situation in a quick review.
3) Your three main options (and who each suits)
A) Stay variable
- Pros: Flexibility, easy extra repayments, often best with offset strategies.
- Cons: You wear future rate rises in full, and repayments can keep creeping up.
B) Fix (some or all)
- Pros: Certainty. You know what your repayments are doing for the fixed term.
- Cons: Less flexibility. Break costs can apply if you change the loan during the fixed period.
C) Split the loan (popular for a reason)
A split loan is where part of your loan is fixed and part is variable — for example, 50% fixed / 50% variable.
4) When a 50/50 split can be the “best of both worlds”
- You want certainty on part of your repayments for budgeting.
- You still want flexibility to make extra repayments, use offset, or keep options open.
- You don’t want to bet everything on one rate path (up or down).
The strategy vibe
If fixed rates end up being the better deal for a while, you’ve protected part of your loan. If variable rates improve later, you still have a chunk ready to benefit. That’s why so many borrowers like the split right now.
5) What we do in a Rate Review (in plain English)
- Check your current rate (and whether it’s quietly crept up).
- Compare fixed vs variable vs split options that match your goals.
- Work out real savings after fees and costs (no “headline rate theatre”).
- Map out a plan — negotiate, refinance, or restructure.
- Move fast if needed so you’re not trying to do paperwork after the next hike lands.
Want to lock something in before the next move?
If your rate is hovering in the 5.7%–5.99% range, or you just want to sanity-check your options, we’ll run the numbers and talk you through the best path: fix, split, or stay variable.
Contact Us ASAPGeneral information only — not financial advice. Consider your situation and objectives before acting.
FAQs
Do I need to fix 100% of my loan?
Nope. Many people choose a split so they get a stable fixed portion plus a flexible variable portion.
Is now a good time to fix?
It depends on your current rate, your budget comfort, and what you need flexibility for. If you’re already on a high variable rate and want certainty, fixing (or splitting) can be worth exploring before lender pricing shifts again.
What’s the catch with fixed loans?
Fixed loans can come with limits on extra repayments and may have break costs if you exit early. We’ll explain the trade-offs clearly before you commit.
How fast can we do a review?
Quick. Give us your current lender, rate, loan balance, and whether you’ve got an offset — and we’ll tell you if you’re competitive or paying the loyalty tax.