Fixed or variable? What's changed since the Reserve Bank's September rate rise

If you've been putting off a decision between a fixed and a variable home loan, the past few weeks haven't made it any easier. The Reserve Bank lifted the cash rate by 0.25 percentage points to 4.60 per cent on 29 September, its fourth increase this year. What's happened since then is arguably more interesting than the decision itself, because lenders haven't simply passed that single rise through. Fixed rates, in particular, have moved by a lot more.

Fixed rates have jumped further than the cash rate

In the week after the Reserve Bank's meeting, seventeen lenders raised their fixed rates by an average of 0.24 percentage points, according to data from Canstar reported by Broker News. Across the weeks before and after the decision, lenders lifted 289 individual fixed rates in total. Some of those increases were sizeable well before the cash rate even moved. Commonwealth Bank, for instance, raised fixed rates for new owner occupier and investor customers by up to 0.48 percentage points in late September, nearly double the size of a standard Reserve Bank move.

This is a useful reminder of something worth understanding in plain terms. Fixed rates aren't set by the Reserve Bank's decision on the day. Lenders price them ahead of time, based on where they expect the cash rate and their own funding costs to be heading over the life of the fixed term. When fixed rates jump before and after a widely expected hike, it reflects the bank's own view of the next year or two, not a guarantee of what the Reserve Bank will actually do.

Variable rates followed too, but more gradually

The big four banks confirmed they would pass the September increase on in full to variable loans, effective from 9 October. That move has quietly ended an era, with sub 6 per cent variable rates from the major banks now gone entirely. Separately, seven lenders lifted 49 variable rate products by an average of 26 basis points in the days after the meeting, on top of the standard pass through of the cash rate rise itself.

As things stand, the average owner occupier variable rate on a principal and interest loan sits at 6.63 per cent. The lowest advertised variable rate in the market, from a smaller non bank lender, is 5.69 per cent, a reminder of how wide the gap has become between the major banks and smaller lenders competing hard for new business.

What this has actually cost borrowers

For a household with a $600,000 loan, repayments are now about $364 a month higher than they were before the first of 2026's four rate rises. The September increase alone accounts for roughly $91 of that. If your budget has felt tighter since the start of the year without an obvious single cause, this is most of the reason why.

Weighing up fixed and variable from here

A fixed rate locks in your repayment for a set period, usually one to five years, which gives you certainty but means you won't benefit if rates fall during that term and can involve break costs if your circumstances change. A variable rate moves with the lender's own rate decisions, which gives you flexibility, including the ability to refinance or make extra repayments without penalty, but leaves your repayments open to further rises.

There's no single right answer here, and anyone promising one is overstating how predictable this is. What does matter is understanding how a lender actually assesses what you can borrow. Every application, whether for a fixed or variable loan, is tested against a buffer of 3 percentage points above the actual interest rate, a standard set by APRA to make sure borrowers can handle future rate rises. That buffer hasn't changed, but it means the rate you're quoted today isn't the only number that determines what you can borrow or whether a future refinance will go smoothly.

What's next

The Reserve Bank's next decision falls on Melbourne Cup Day, 3 November. As at 7 October, markets were pricing roughly a 70 per cent chance of a hold and closer to a 28 per cent chance of another rise. Former Reserve Bank board member Ian Harper has described a further hike this year as plausible rather than likely, which is about as firm as anyone credible is willing to be right now. Canstar's Josh Sale put it well, describing the current environment for variable borrowers as a moving target, with a fifth hike this year still a live question.

Whichever way you're leaning, the decision is easier to make with your own numbers in front of you rather than headlines. If your fixed term is coming up for renewal, or you're weighing up locking in for the first time, it's worth running the comparison properly before you commit either way.

Figures in this article are drawn from Canstar data reported by Broker News (7 October 2026) and earlier Broker News reporting (22, 24 and 30 September 2026), the Reserve Bank of Australia's September 2026 rate announcement, APRA's current macroprudential settings, and RBA Rate Watch's market pricing as at 7 October 2026.

This article is general information only and does not take into account your personal objectives, financial situation or needs. Please speak with a Claremont Financial broker before making any borrowing decision.