For most property investors, the choice between fixed and variable comes down to three things: whether you need certain cash flow to hold the property, whether you need an offset account against the loan, and whether you might sell or refinance within the next few years. Fixed protects cash flow. Variable protects flexibility. Many investors split the loan to get some of both.
Right now fixed investor rates are slightly below variable ones, which narrows the cost of choosing certainty.
Investor rates right now
As at 2 October 2026, average investor rates for a $600,000 principal and interest loan at 80% LVR were:
| Rate type | Average investor rate | Monthly repayment on $600,000 over 30 years |
|---|---|---|
| Variable | 6.89% | $3,948 |
| 1-year fixed | 6.69% | $3,868 |
| 2-year fixed | 6.70% | $3,872 |
| 3-year fixed | 6.75% | $3,892 |
Source: Canstar averages as at 2 October 2026. Repayments are our calculations and exclude fees. See investor home loan rates for why investor pricing sits above owner-occupier pricing.
With the cash rate at 4.60% after four rises in 2026, fixed rates sit up to 0.2 percentage points below the average variable rate. Lenders are pricing in an expectation that rates will eventually come back down, but nobody can say when.
The case for fixing an investment loan
- Predictable holding costs. Your largest expense stays the same for the fixed term, which makes it easier to work out whether rent covers the loan.
- Protection while rents adjust. Rents usually reset only at lease renewal. Fixing stops a run of rate rises from squeezing cash flow faster than rent can catch up.
- A lower rate today. At current averages, a two-year fixed rate saves about $76 a month on a $600,000 loan compared with the average variable rate.
The case for staying variable
- Offset account access. Most fixed loans either have no offset or only a partial one. For an investor, an offset is valuable because it lets you hold cash against the loan without paying it down permanently, which keeps the loan balance (and the deductible interest) intact if you later move the cash elsewhere.
- Freedom to sell or refinance. Selling an investment property during a fixed term can trigger break costs. Investors sell, restructure and release equity more often than owner-occupiers.
- Unlimited extra repayments. Useful if you want to pay down non-deductible debt or reduce the loan before retirement.
- Rate cuts flow through. When rates fall, a variable loan benefits immediately.
Splitting an investment loan
A split loan is a popular middle path for investors. You might fix 50 to 70% of the balance for cash flow certainty and leave the rest variable with an offset account. Keep the splits as separate loan accounts so it stays clear which borrowing relates to the investment, which matters for tax.
Interest-only and fixed rates
Many investors use interest-only repayments to maximise cash flow. Interest-only can be combined with either fixed or variable rates, though interest-only pricing is usually higher than principal and interest. Check the interest-only end date against the fixed term end date so both don’t reset at once.
How tax affects the decision
Interest on a loan used to buy a rental property is generally deductible, whether the rate is fixed or variable. Break costs and some loan costs may also be deductible or claimable over time, but the rules depend on why the cost arose. Confirm your situation with a registered tax agent.
A simple decision guide
| Your situation | Usually suits |
|---|---|
| Tight cash flow, rent only just covers costs | Fix most of the loan |
| Holding significant savings to deploy later | Variable with offset |
| May sell or refinance within 3 years | Variable, or a short fixed term |
| Want certainty and flexibility | Split, for example 60% fixed and 40% variable |
For the general version of this decision, see fixed vs variable: which suits you.
Frequently asked questions
Can I have an offset on a fixed investment loan?
Some lenders offer a partial offset on fixed loans, but most full offset accounts only attach to variable loans. If you want an offset, split the loan and attach the offset to the variable portion.
Do break costs apply if I sell an investment property?
They can. If you sell during a fixed term, the lender may charge break costs, particularly if rates have fallen since you fixed. Ask your lender for an estimate before listing the property.
Is a split loan good for investors?
Often, yes. A split gives you certainty on part of the loan and keeps an offset and extra repayments available on the rest. Keep each split as a separate account so the investment borrowing stays clearly identifiable.
Sources
- Canstar, Average home loan interest rates, as at 2 October 2026
- Reserve Bank of Australia, Monetary Policy Decision, 29 September 2026
- Australian Taxation Office, Interest expenses on rental properties
General information only. It does not consider your objectives, financial situation or needs and is not credit or tax advice.