This is one of the most popular questions I’m asked by clients when talking about interest rates; they’re always keen to learn my thoughts. So I’ve decided to pass on some of my own actual experiences.

In March 2013 my variable rate investment loan was 5.40% and I was considering it might be a good time to split the loan in two, fixing one portion and leaving the other at the variable rate. The fixed rate for 2 years was 4.99% which I thought was a pretty good rate so I took the plunge and fixed. Just my luck the following week the 2 year fixed rate dropped to 4.79%. I had moved too early.

In May 2013 the variable rate dropped to 5.13%, followed by another rate drop in August 2013 to 4.88%. This rate remained until the February 2015.

The fixed portion of my loan matured in March 2015 and I decided to let it roll over into the variable rate.

In summary, by splitting my loans 2 years earlier I had actually cost myself money but at least there was an upside. As these loans were for an investment property the interest was tax deductible and some of my costs were offset so I didn’t lose too much.

Earlier this year I was listening to a major bank’s Economist who had a similar opinion to others at the time, believing there would be one more rate drop in the near future (this occurred in May 2015) with a small chance of another reduction later in the year (the jury is still out here).

What is going through my mind now is, do I wait until the next rate drop before considering locking in or do I move now? I know that just because the variable rate drops doesn’t mean that fixed rates will too and history has proved this many times in the past.

So at this stage I am going to just sit on the fence a little longer and see what happens to the variable and fixed rates before I make my decision.

My thoughts regarding fixing a loan remain pretty simple; “do what helps you sleep at night”. If you do decide to fix your rate then do not look at the fixed rates again until it’s time to review, because if rates move the wrong way then you may start having sleepless nights (and I enjoy my sleep).

I would love to hear your stories about fixed rates whether it is one where you came out in front or one which makes you cry. We can all learn from peoples true experiences.

If you have any questions or would like to discuss further, please do not hesitate to contact Lending Specialist on

(03) 8805 1800 or email myself at