Certainty in Uncertain Times: Fixed, Variable or Split in 2026?

In these uncertain times, it is natural to look for stability wherever you can find it.

Markets remain sensitive to global tensions and inflationary pressures, and lenders are adjusting pricing accordingly. Whether you hold a home loan, an investment property loan, or business finance, one question is top of mind:

Should I fix, stay variable, or split my loan in 2026?

This is not just a question about where interest rates are headed. It’s a decision about how much certainty you need in your financial structure.

A Snapshot of Current Rates

Right now in Australia:

Variable home loan interest rates are generally starting from about 5.08% p.a. on competitive products, with comparison rates often in the 5.1%–5.3% range. 

Fixed home loan interest rates for 1–3 year terms typically sit in the mid-5% to low-6% p.a. range, depending on the lender and features. 

These broad ranges give a sense of the cost of borrowing today. They are influenced by the Reserve Bank of Australia’s (RBA) cash rate, which was lifted to 3.85% in February 2026, and recent pricing decisions by major lenders. 

Variable: Flexibility and Opportunity

Variable loans remain attractive for borrowers who value flexibility.

Pros of variable rates:

1. Benefit immediately if rates fall
2. Refinance or restructure more easily
3. Make extra repayments without penalty
4. Adjust facilities if your circumstances change

Variable rates also tend to be offered at or near the lower end of the market’s range when lenders compete for customers, though they can rise quickly if funding costs or the cash rate increase.

Cons to consider:

1. Repayments can rise unpredictably
2. Budgeting can feel less certain

Who might favour variable?

1. Borrowers with short-term plans
2. Those planning to refinance soon
3. People comfortable with some volatility

Fixed: Certainty and Predictability

Fixing a portion (or all) of your loan gives clarity, particularly in a context where lenders are pricing in future rate risk.

Pros of fixed rates:

1. Predictable repayments over the fixed term
2. Protection against further rate rises
3. Easier budgeting

Current fixed rate offers generally sit above basic variable rates, but they lock in that certainty for a set period.

Cons of fixing:

1. Break fees can apply if you change your loan early
2. You may miss out if rates fall

Fixed rates often make sense for borrowers who prioritise peace of mind or have tight cash flow buffers.

Split Loans: A Balanced Approach

For many people, the most strategic solution is neither fully fixed nor fully variable.

A split loan lets you:

1. Fix a portion for stability
2. Keep a portion variable for flexibility
3. Balance predictability with opportunity

This approach means you don’t have to pick a side. You can fix enough to feel comfortable with repayments and keep a variable portion to retain flexibility for refinancing, extra repayments, or future changes.

The Risk of Trying to Time the Market

Trying to predict the direction of interest rates, especially in a volatile global climate, is notoriously difficult.

Rates can be influenced by:

1. Economic data
2. Global commodity prices
3. Central bank decisions
4. Funding markets that shift more quickly than monetary policy

Rather than asking “Will rates go up or down next?”, a more useful question is:

What loan structure supports your goals, whatever the market does next?

A Practical Framework for 2026

Here are a few questions to guide your thinking:

1. How much payment volatility can my budget withstand?
2. Am I planning to refinance, sell, or restructure within the next 2–3 years?
3. Do I value flexibility or stability more right now?
4. Would splitting my loan provide balance without limiting option value?

These questions often give more practical clarity than watching headlines.

Certainty Is a Strategy

In uncertain times, certainty is not about predicting the future.

It is about structuring your finance, so it supports your goals regardless of where rates move next.

Fixed, variable, and split are not competing choices, they are tools. The right combination depends on your unique circumstances, plans, and appetite for risk.

If you need any assistance with working out the type of loan that would work for your circumstances, please get in touch.

Written by Troy Schirmer, National Finance Manager – AP Group 

AP Group are the leading pharmacy experts in Australia and specialise in helping first time buyers find the right pharmacy and secure the finance to support their purchase.  

We connect existing owners with over 5000 ready and eager investors via our cutting-edge online Data Room. Our Data Room keeps confidential listing data secure and allows buyers to make informed decisions on each of our pharmacies for sale.  

AP Group have built connections with all the major banks and a host of smaller lenders, ensuring that first time pharmacy buyers find a better deal.  

About the Author: 

Troy brings more than a decade of experience in banking and lending, having spent 11.5 years with NAB, including eight years as a Banker within NAB Health. He has supported clients across Victoria and nationally, helping finance the purchase of a wide range of businesses, from pharmacies and medical clinics to childcare centres and other commercial assets.

Highly experienced across business lending, home lending, and asset finance, Troy holds a Bachelor of Commerce with majors in Accounting and Finance, along with a Diploma of Financial Planning. He is known for his practical approach and ability to navigate complex lending structures with clarity and confidence.

Outside of work, Troy enjoys spending time with his family, travelling, watching just about any sport, and is a proud Essendon tragic – regardless of the score.