Should you fix your home loan rate for 2026?

The RBA kept the cash rate on hold in December, but experts are split on what could happen next year.

Gone is the confidence of a few months ago when experts believed there would be further interest rate cuts in 2026.

Now, experts are divided on how the rates could move next year. It's an even split between whether rates will stay where they are, increase or decrease.

Several lenders have even started to increase their fixed rates in anticipation of a more unsure year.

So, the question on everybody's lips: Should you be fixing your home loan interest rate?

No crystal ball

We spoke to mortgage broker and director of Mortgage Wealth, Raj Ladher, about what conversations he's having with his customers right now.

The biggest question he gets is "what's happening with interest rates?"

He says "we don't have a crystal ball", but adds that we do at least know that banks have started lifting their fixed rates.

Despite no RBA movement, some fixed rates have increased by up to 0.30%: more than we'd be expecting the RBA to change the cash rate by.

"That's a telltale sign of what's potentially going to be ahead of us," Ladher says. "At the very least, there's a good chance there's not going to be any more reductions possibly for the next 6 months or so."

Fixed rates provide certainty

So, is it time to fix interest rates if you have a home loan?

Ladher says he's started having those conversations with his clients and in some cases, yes. But it's more about providing certainty than trying to beat the banks.

"You're not going to make a bank go bankrupt by having a fixed rate for a certain time," he says.

"[But] if the uncertainty is troubling them, then absolutely they should fix so they don't have to worry about interest rates."

Weigh up fixed rate terms

Ladher says the length of time to fix your home loan rate depends on your circumstances.

"1 year may suit some people, but 1 year comes around so quick. Before you know it, you're doing it all over again. I think 2 years is a sweet spot," he says.

But for some borrowers fixing for a longer period might work better.

"For first-time buyers, 3 years gives them enough time to get used to home ownership. They can understand what their expenses look like, get their feet under the table and have 3 years worth of repayments so they've knocked down their mortgage a little bit. Their property value will have increased a little bit, and they'll be in a good position," he says.

Why would you not fix your home loan?

Fixing your home loan interest rate now is not going to be a guarantee of paying a cheaper rate for the next few years. It's a gamble that could pay off or it could not.

And for some people, fixed rate home loans just don't provide what they need. Ladher says he looks at how people use their home loans, it's not just about the costs.

"Having a fixed rate comes with its limitations," he says. "You can't use an offset account or a redraw, you can't make overpayments, things like that.

"So, if a client is looking at selling their home within a certain amount of time, you just wouldn't fix it because of those limitations."

The gamble of fixing your home loan

We'll never know for certain what's going to happen. Looking at this year, the market was almost certain interest rates would continue to decline.

Then, the economy had other ideas.

It seems like a good idea to fix now, but we could be looking at a very different economy in 12 months time.

"A fixed rate is more of a tool for budgeting," says Ladher.

"But the great thing about mortgages in Australia is you can have a bit of both. You can spread your bets.

"You could potentially have 50%, or whatever that figure looks like, on fixed with a small portion on variable as well.

"Then you've still got the flexibility of the variable rate which could potentially go up or go down, but it then allows you to use savings to offset and redraw as well."