Fixed vs Variable › What is the difference between fixed and variable rates?

What is the difference between fixed and variable rates?

A fixed rate locks your interest rate and repayments for a set period, usually one to five years. A variable rate moves up or down over time with the market, so your repayments can change. Each has clear trade offs.

Written by Ross McFarlane, Licensed Mortgage Broker (Credit Representative 526725). About the author

Why this matters

The choice is really about certainty versus flexibility. Fixed gives you a known repayment, which helps budgeting, but limits features and extra repayments. Variable can rise or fall and usually comes with offset accounts and free extra repayments. Neither is universally better; it depends on your plans and how you feel about rate movement.

The key points

Fixed locks your rate and repayments for a set period.
Variable moves with the market over time.
Fixed gives certainty, variable gives flexibility.
The right one depends on your plans.

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More fixed vs variable questions

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Last reviewed: June 2026

General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.