Fixed Home Loan Rates in Australia: The September 2026 Update

Why Fixed Rates Can Fall While the RBA Signals a Hike

It looks contradictory: the Reserve Bank is bracing markets for a possible fourth cash rate increase of 2026, yet several lenders have quietly cut their fixed rates over the past few weeks. The explanation lies in how fixed rates are actually priced.

Variable rates track the cash rate directly. Fixed rates are priced off wholesale interest rate swap markets, which reflect what professional traders expect the average cash rate to be over the fixed term, not just where it sits today. If swap markets believe any further RBA hikes will be short-lived and followed by cuts in 2027, fixed pricing can fall even while the RBA itself sounds hawkish about the next meeting.

Average Fixed Rates by Term, September 2026

Shorter fixed terms are currently the sharpest priced part of the market. The gap between the cheapest 1 year fixed rate and the average variable rate has narrowed to the point where fixing for a short period now costs less than staying variable for many borrowers.

Two and three year terms are attracting the most interest from borrowers fixing this quarter: long enough to ride out this hike cycle, short enough to avoid the higher pricing further along the curve.

Fixed vs Variable: A Genuine Inversion

For most of the 2026 hike cycle, variable rates sat below fixed rates, the normal state of affairs when a central bank is still raising rates. That has now flipped for shorter fixed terms.

Use our rate comparison calculator to model your own numbers side by side before deciding whether fixing suits your situation.

The 29 September Decision Still Matters

The cash rate has already risen 0.75 percentage points in 2026, from 3.60% in January to 4.35% after hikes in February, March and May. It held in August. NAB now forecasts a fourth hike to 4.60% at the 29 September meeting, while ANZ and CBA expect the same move in November if not September, and Westpac remains the lone major bank still forecasting a hold.

The Mortgage Cliff: Old Fixed Rates Expiring Now

Rate movements this month matter most to new borrowers and those refinancing, but a second group faces a much larger shock: borrowers whose ultra-low fixed rates from 2021 and 2022, often 1.99% to 2.49%, are expiring and reverting to today's variable rates.

If your fixed term is expiring in the next few months, our guide to the key concerns from rising interest rates covers the mortgage stress data behind this shock and what it means in practice.

Should You Fix, Stay Variable, or Split?

There is no universally correct answer, but the current rate environment gives some clear signals worth weighing against your own circumstances.

• Fixing suits borrowers who value certainty over flexibility. With short-term fixed rates now genuinely competitive with variable, locking in removes the anxiety of each RBA meeting without a significant rate penalty.
• Staying variable suits borrowers who expect to sell, refinance, or make large extra repayments. Most fixed loans restrict extra repayments and charge break costs if you exit early.
• A split loan lets you hedge both ways. Fixing a portion while keeping the rest variable gives partial certainty while retaining offset and redraw flexibility on the variable component.
• Check break costs before fixing if you might sell within the term. Exiting a fixed loan early can trigger break costs that erode or exceed the savings from the lower rate.