Should you fix your home loan before it’s too late?

2 hours ago 3

Opinion

January 17, 2026 — 5.02am

Until the latest inflation reading, an interest rate hike next month looked like a done deal. Now, the date has probably pushed back a bit.

But, far from rate relief, the RBA is likely this year to inflict some borrowing pain. So, is there anything mortgage holders can do about it? Is it too late to fix your interest rate? Yes – and no.

Fixed rates can be a great way to hedge against future interest rate rises, but only if you act sensibly.

I asked the researchers at Mozo to analyse fixed rate movements since interest rate expectations began changing from cuts to hikes, back in November.

That month, 17 lenders increased some or all of their fixed rates, in December, 41 lenders followed suit and so far in January, 11 lenders have. This includes all the big four banks with CBA most recently increasing their rates on Thursday.

In other words, interest hikes are happening. Lenders know it. When you look at a long-term interest rate chart, you can see that the mortgage variable rate always moves a bit after the cash rate moves, but that the three-year fixed rate shifts just ahead of that.

Peter Marshall, head of data at Mozo, says: “It’s a pretty strong correlation that some months ahead, often three to six months ahead, that fixed rates lift.” That’s if lenders’ forecasts are right, of course.

I would only ever fix half my mortgage interest rate and only ever for a maximum of three years.

And it’s important to acknowledge that interest rate expectations really turn on the head of a pin – remember this time last year when six cuts were supposed to be coming? We had three and now we are here.

“Many lenders have already implemented some increases, meaning consumers will have to look harder to find the best rates now than they would have in November,” Marshall says.

“The sharper fixed rates from big lenders have already gone but for people prepared to look around a bit, there are still some pretty good options out there.”

Where? For one-year fixes, you can get rates under 5 per cent – just a smidge, mind you– from Home Loans 360, and just over 5 per cent from Community First Bank, MOVE Bank and Summerland Bank.

More lenders offer sub-5 per cent over two years, including Home Loans 360, Community First Bank, BankVic, Regional Australia Bank and MOVE Bank.

Over three years, the top products – the first three also slightly under 5 per cent – are from BankVic, Community First Bank, Home Loans 360, MOVE Bank and Greater Bank.

It’s when you get to four-year fixes that even the best rates on offer tip over 5 per cent. The lowest deals are from Greater Bank, Hume Bank, G&C Mutual Bank, Newcastle Permanent and Tiimely Own Home Loans.

And over five years – again with the lot over 5 per cent – it’s Greater Bank, MOVE Bank, Hume Bank, Newcastle Permanent and G&C Mutual Bank.

And if you are with one of those lenders, so a fix would be easy, you might be considering one. But please consider this first: when you fix your interest rate, you do a deal with a lender to make those – set – payments for that full period.

Rates have unexpectedly fallen, far and fast, twice in the past two decades: firstly, on the global credit crack up and secondly in pandemic panic.

Both times I had people contact me in despair that they had been persuaded by interest rate pressures to fix at the previous high and were stuck making exorbitant repayments. There’s nothing you can do.

And that is why I would only ever fix half my mortgage interest rate and only ever for a maximum of three years. Lenders still – naturally – price fixed rates to win and by taking them up you are quite literally betting against the bank.

And we all know how that usually goes.

Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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