Should I go fixed or variable? This is one of the questions that Perth home buyers tend to struggle with. While it’s the great mortgage debate, there is no single or right answer. It depends on your financial goals, your circumstances, and what’s happening in the broader interest rate environment.
Here’s everything you need to know to make an informed decision.
Fixed Rates Explained
A fixed rate mortgage locks in your interest rate for a set period and it is usually one to five years.
During that time, your repayments stay exactly the same despite what the Reserve Bank of Australia (RBA) does with the cash rate.
The upside is certainty.
You know precisely what you’re paying each month, which makes budgeting more straightforward and easier. For first home buyers in Perth who are stretching to enter the market, that predictability can be helpful and reassuring. A fixed rate mortgage in Perth is also a useful hedge if you believe rates are going to rise.
The downside is inflexibility.
Fixed rate loans typically come with limited (or no) ability to make extra repayments, and they rarely include an offset account. If you need to break the loan early due to a sale, refinance, or change in circumstances, you’ll likely face break costs, which can be high.
Fixed rates are also priced by the lender based on their outlook for future rates, not where the cash rate sits today. So if lenders expect rates to rise, fixed rates will often be priced higher than variable ones.
Variable Rates Explained
A variable rate home loan in Perth aligns with the current market conditions. When the RBA cuts the cash rate, your lender will generally (though not always) pass on some or all of that reduction.
When rates increase, your repayments rise accordingly.
The upside is flexibility.
Variable loans typically allow unlimited extra repayments, access to redraw facilities, and the ability to link an offset account which can help reduce the interest you pay over time. They’re also easier to exit without penalty if you want to refinance or sell.
The downside is uncertainty.
If rates climb, your repayments go up, sometimes sharply. We saw this firsthand between 2022 and 2023, when the RBA lifted the cash rate 13 times in quick succession, catching many borrowers off guard.
Split Loans: The Best of Both Worlds?
Can’t decide? You don’t have to.
A split loan lets you divide your mortgage into two portions: part fixed, part variable. You get the repayment certainty of a fixed rate on one portion, while retaining the flexibility and features of a variable loan on the other.
It’s a genuinely popular option, especially for borrowers who want to make extra repayments (on the variable portion) while protecting themselves from rate rises (on the fixed portion).
The right split ratio, for example, 50/50 or 70/30, depends on your priorities and circumstances, and it’s worth talking through with an experienced mortgage broker in Perth who can project the numbers for you.
Where Rates Are Right Now and Where They Might Go
It’s been a volatile few years for Australian interest rates. After delivering three rate cuts across 2025, the RBA reversed course and lifted the cash rate by 0.25% in February 2026, taking it back to 3.85%.
The interest rate environment remains genuinely uncertain with inflation proving stickier than expected and the RBA signalling that further moves are firmly on the table.
RBA Governor Michele Bullock has been clear: every meeting is live. Major bank forecasters are currently pricing in the possibility of at least one more rate rise in 2026, potentially as early as May. That said, longer-term projections remain cloudy, and markets can reprice quickly.
What does this mean for you? Simply put, it means the case for considering a fixed rate is stronger than it was 12 months ago, particularly if you value certainty and your budget has limited room to absorb further increases. But the decision is never one-size-fits-all.
A Framework for Deciding
It’s worth asking yourself a few questions before meeting with a mortgage broker:
How sensitive is your budget to rate rises?
If an extra $200–$300 per month would genuinely stretch you, fixing all or part of your loan could give you peace of mind.
Are you likely to need flexibility?
If you’re planning to sell within a few years, make large lump sum repayments, or restructure your loan, a variable product will likely serve you better.
What’s your income trajectory?
If your income is stable and predictable, the certainty of a fixed rate aligns well. If you’re self-employed or expect your financial picture to shift, flexibility may be worth more to you.
How do you feel about financial uncertainty?
It’s an honest question. Some borrowers can comfortably ride rate fluctuations; others find it stressful. There’s no shame in choosing stability for its own sake.
Perth-Specific Factors Worth Knowing
Perth’s property market has its own dynamics, and the local lending landscape reflects that. Bankwest, as a WA-based institution, has historically offered competitive rates for Perth borrowers, and regional lenders like Keystart continue to play an important role for first home buyers entering the market.
Beyond that, lender competition in Perth has intensified in recent years. Non-bank lenders and smaller institutions are increasingly aggressive on fixed rate offers, and the gap between headline fixed and variable rates shifts regularly. This is exactly why working with a mortgage broker in Perth, rather than going directly to a single bank can uncover options you wouldn’t otherwise see.
Our team at Strategic Mortgages Perth monitors the local home loan rate landscape daily, comparing products across 30+ lenders to ensure our clients are getting access to the most competitive options available.
Get Personalised Rate Advice from Perth’s Local Experts
The fixed vs variable question is ultimately a personal one, shaped by your finances, your goals, and your appetite for risk. The good news is that you don’t have to figure it out alone.
At Strategic Mortgages Perth, our brokers take the time to understand your full situation before making any recommendations. Whether you’re buying your first home, refinancing an existing loan, or building an investment portfolio, we’ll walk you through the options in plain language and help you choose a structure that genuinely fits your life.
Ready to talk rates? Book a no-obligation consultation with our team today and get personalised home loan advice from a mortgage broker in Perth who truly knows the local market.
Disclaimer: The information provided in this article is general in nature and does not constitute financial, tax, or legal advice. Individual circumstances vary. We recommend consulting with qualified professionals before making financial decisions.
