Should you fix your home loan as interest rates rise?
It's only the middle of March and we've already had two interest rate rises in 2026. There is every chance there may be more to come as the oil shock from the war in Iran continues to drive up oil prices and inflation.
Home loan rate rises always create uncertainty and concern amongst home loan holders as they worry about the affordability of their loan and the impact that increased loan repayments will have on their lives. The two RBA rate rises so far this year have added roughly $230–$240 per month to the average Australian home loan, or around $2,800 per year, assuming the increases are passed on in full.
In this climate one way to guard against rate rises and provide certainty is to consider fixing a portion of your home loan to lock in the interest rate for the next couple of years (between (1-5 yrs) which would hopefully be enough time to ride out the current turmoil and uncertainty.
Current fixed rates are slightly higher than the current variable rates but with interest rate rises to follow it may be that very quickly the fixed rates that have been locked in end up being lower than the variable rate creating savings on top of providing certainty.
When considering whether to fix or stay on a variable rate some of the key questions to ask yourself are:
- How serious an impact will future right rises have on the affordability of your home loan,
- Your ability to make changes to your lifestyle or spending habits to accommodate increased loan repayments,
- The degree of certainty you are comfortable with (at what point will it start to cause you to lose sleep?).
We welcome the chance to have a chat with you - or your family and friends - to explore options and strategies to manage home loan debt through this turbulent and uncertain time.
If you have adult children who've recently jumped into the market through the 5% Deposit First Home Buyers Scheme, they may be feeling the pinch from starting out on variable rates that are quickly climbing.
I’ve recently helped a number of our clients secure a better deal on their home loan. If you'd like a complimentary home loan health check, contact your FMD adviser or book a chat with me.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.