Right now, fixing your rate often means paying for two or three future rate rises that haven’t happened.
That’s why so many borrowers are paying for peace of mind that doesn’t actually exist.
We do not know what interest rates will do next. No one does. Rates may rise, they may stay flat, or they may eventually fall. That uncertainty is exactly what is pushing so many borrowers to consider fixing again, even though the window for genuinely good fixed-rate deals has largely closed.
The question is no longer whether fixing feels safe. The question is whether it actually stacks up.
Why this conversation has shifted
Not long ago, the dominant expectation was that rates would start falling. That expectation has changed.
Inflation has proven sticky, forecasts have softened, and banks have moved away from pricing in further cuts. Some are now openly talking about a plateau, with the next move potentially being up rather than down. In response, lenders have quietly lifted fixed rates across owner-occupied and investment loans.
That repricing matters. It means fixed rates today are no longer a discount. In many cases, they are a premium.
What fixing is really doing in this market
When borrowers fix their rate right now, they are not avoiding cost. In most cases, they are bringing cost forward.
Fixed rates are being priced on the assumption that rates may rise. That means borrowers are often paying for one to three future rate increases upfront, whether those increases happen or not.
This is where the idea of peace of mind starts to break down. You are not only insuring against something that may happen, you are paying for it today.
What “peace of mind” actually costs
The table below shows the extra interest paid compared to staying on a variable rate, based on current pricing.
Extra interest paid compared to variable (5.40%)
| Loan size | 1 year fixed | 2 year fixed | 3 year fixed |
| $600,000 | +$600 per year | +$900 per year | +$1,200 per year |
| $800,000 | +$800 per year | +$1,200 per year | +$1,600 per year |
| $1,000,000 | +$1,000 per year | +$1,500 per year | +$2,000 per year |
This is the premium you are paying upfront for certainty.
On a million-dollar loan, that can mean paying an extra one to two thousand dollars every year before any rate rises actually occur. Rates would need to rise multiple times before this decision even breaks even.
The insurance comparison most people are making
We understand why people fix. It feels responsible.
You insure your house. You insure your car. You insure your income. You pay for protection against something going wrong, even though it might never happen.
The difference here is timing.
With insurance, you pay in case something happens. With fixed rates right now, you are paying for the event in advance.
If rates rise once, you may still be behind. If they rise twice, you might be close to even. If they rise three times or more, fixing starts to look sensible.
That is the real risk calculation people should be making, not a general fear of rates moving.
Why affordability does not improve when you fix
Many borrowers look at fixing because their budget already feels tight.
The irony is that fixing usually locks in higher repayments immediately. So instead of reducing pressure, you formalise it.
At the same time, fixed loans often come with reduced flexibility. Extra repayments, offsets, redraw and refinancing options can be limited or penalised. You lose the ability to adapt at the very moment adaptability matters most.
The bigger picture people are missing
There is another layer to this conversation.
If rates rise, borrowing capacity falls. That means investors may be able to borrow less later this year than they can today. First home buyers may see pre-approvals shrink. Waiting does not just affect repayments, it affects options.
At the same time, this is not a market where prices are expected to meaningfully fall. Supply remains tight, construction has slowed, and population growth continues. Even if price growth slows, affordability does not necessarily improve.
This combination is why decisions based purely on fear tend to backfire.
What we would do in this environment
Having seen multiple rate and property cycles, our view is simple.
When fixed and variable rates are far apart, the decision is easier. When they are this close, all or nothing decisions tend to be the wrong ones.
For many borrowers, the most balanced approach right now is to hedge. Stay mostly variable. Fix only a portion if certainty matters. Review regularly as conditions change.
That approach avoids overpaying today while still managing risk if rates do move.
A note on the numbers
The examples above assume an owner-occupied, principal and interest loan at 80 percent LVR, using representative big-bank pricing. Actual rates vary depending on loan size, structure and lender, and individual circumstances will differ.
That is exactly why decisions like this should always be based on your own numbers, not headlines.
Fixing your rate in 2026 may feel safe. But in this market, the maths deserves a closer look.
And if you are not sure what your numbers are telling you yet, that is the only real risk worth addressing.
If you’d like us to run your numbers, book a free 30-minute finance strategy session
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).