Fixing your rate isn't a bet on the future. Here's when it makes sense — and when you're just gambling with your mortgage.

Two Types of Interest Rates in Australia

Variable rates fluctuate, especially when the Reserve Bank of Australia changes the cash rate. Fixed rates lock in a rate for one to five years. If your rate stays the same, so does your repayment. Sounds appealing. But it's not always the right move.

The Wrong Reason to Fix

If your thinking sounds like "rates can only go up from here, so I should lock in now" — that's crystal ball thinking. It's gambling.

Imagine fixing at 3.99% in February 2020, thinking that was a great deal. Within months, the same bank was offering 1.99% fixed rates. We simply do not know what the future holds. The bank is the casino, and the casino always wins. They're never going to offer you a product they won't make money on.

The Right Reason to Fix

Stability. If you'd lose sleep worrying about how you'll afford repayments if the rate goes up, fixing makes sense. Your repayments won't change during the fixed period, regardless of what happens to the economy. If that helps you budget and sleep well at night, it's a perfectly valid reason.

Property investors may also find fixed rates useful for calculating yields more accurately.

What You Give Up

Fixed rate loans come with significant trade-offs:

Break costs if you refinance or sell before the fixed period ends — these can be substantial
Limited extra repayments (often capped at $10,000–$20,000 per year)
Usually no offset account

Your interest rate is fixed, but so is your flexibility. For borrowers using offset accounts and extra repayments to smash their debt faster, a variable rate with the right features is often the better long-term play.