Written

For

The

Australian

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To

fix

or

not

to

fix,

the

answer

is

not

what

you

think

Here's a counterintuitive thought: with the RBA on the verge of cutting rates, the smartest move for some mortgage holders might actually be to fix.

Sounds backwards, doesn't it? After 13 rate hikes since 2022, everyone is understandably eager to ride variable rates down. Markets are now pricing a February cut at 95 per cent probability, and three to four cuts are expected this calendar year. So why would anyone lock in?

Because the numbers already tell an interesting story. Caxton Pang from Capton Finance points out you can fix for two years at 5.55 per cent right now, versus 6.15 per cent variable. That's an instant 0.6 per cent cut — no waiting on the RBA, no hoping inflation behaves itself. For conservative borrowers who value certainty of repayments, that's a compelling trade-off, even if variable might win out over the long run.

And if inflation flares up again? Fixing looks even smarter.

For anyone buying a car or taking on a personal loan this year, my advice is simple: be patient. These are almost always fixed-rate products, so waiting a few months for cuts to flow through could save you thousands.

Now flip the coin. Retirees have been enjoying their best cash returns in 15 years, but that's about to change. Term deposit rates around 5.5 per cent will likely drift to the mid-4s by year-end — barely keeping pace with inflation at 3.2 per cent.

Where to look? ASX-listed REITs like Garda Diversified (GDF) or Charter Hall Long WALE (CLW) are paying yields of 5–10 per cent and typically do well as rates fall. Non-bank lenders like Balmain Commercial are locking investors into 8.5–10.5 per cent returns for the next 12–24 months. For the cautious, government bond ETFs like AGVT can lock in rates for seven years plus.

Whether you owe cash or own cash, don't wait until the first cut lands to think about your plan.