Fixed Rate Mortgage Investments

Fixed-rate mortgage investments can give investors certainty. When you lock in a fixed rate, you know exactly how much income you’ll receive and when you’ll receive it. In a falling interest rate environment, locking in a higher fixed rate can mean earning more than you would with a variable rate. In a rising rate environment, fixed rates still offer certainty, but you may miss out on future increases. The reality, however, is more complex.

Borrower demand for fixed versus variable mortgages also shifts significantly over time. Fixed-rate demand peaked in 2021 at nearly 50% of all mortgages. By late 2024, around 98% of new mortgages were variable (RBA, 2025).

A common question is: Where are interest rates heading? When the RBA cash rate was close to zero, the only likely direction was up. That doesn’t mean fixed-rate investments were unattractive. When we set fixed rates for borrowers and investors, we factor in expected future rate movements. In other words, today’s fixed rate already reflects where we think interest rates are going.

Variable rates become more valuable when interest rates rise faster or higher than expected. In that case, your income increases in real time and may outperform a fixed-rate investment. The same applies when rates fall more slowly than predicted—variable rates may deliver a better return because fixed rates may have already priced in larger or faster cuts that don’t eventuate.

The key takeaway is that interest rate movements are difficult to predict. Fixed rates offer certainty, but they also lock in a return that may end up being lower than the prevailing variable rate. Many investors choose to diversify—holding a mix of fixed and variable rate investments. ASL offers both options through our mortgage products.

We could also discuss credit spreads—the “risk premium” built into interest rates—but we’ll leave that for another time. For now, assume credit spreads remain unchanged.

Where do we see interest rates now?

At ASL, we have recently increased our fixed-rate mortgages to reflect the latest RBA rate rise and the possibility of further increases. We believe inflation in Australia may remain “sticky,” and the RBA may lift rates once or twice more in 2026. Our variable mortgage rates are currently slightly lower than our fixed rates, but if rates rise, variable rates will adjust upward to benefit investors.

Where do we see interest rates heading?

We believe there is a high chance of 0.25% rate rises in both May and August. Inflation is not under control and geopolitical pressures are further exacerbating this. The war in Iran has put even more upward pressure on inflation as oil prices jump.

If you are looking for first mortgage investments, please contact us to see what is available.

Successful Sale Delivers Strong Returns for Investors

We are pleased to announce the successful settlement of Tweed Office Park, 24–28 Corporation Circuit, Tweed Heads, which took place on 3 February 2026. This marks the completion of an 8-year investment cycle for this sub-scheme and a strong outcome for all participating investors.

Sub-Scheme Performance

Over the 8-year period, the investment delivered a total return of 7.54% per annum. Although rental yields were impacted by lost income during the 2019–2020 COVID period, the overall performance remained strong, supported by solid capital growth.

Tweed Office Park itself is a high-quality commercial asset comprising modern office accommodation, multiple tenancies, and generous onsite parking. The property is distinguished by its 6-Star NABERS Energy rating, reflecting exceptional environmental efficiency and operational performance. Its location within the established Tweed Heads South commercial precinct — close to major arterial roads, retail amenities, and essential services — contributed to its long-term stability and strong tenant appeal.

Looking Ahead

The successful completion of this sub-scheme reinforces the Fund’s commitment to delivering stable, property-backed outcomes for investors. We appreciate the trust placed in us and look forward to continuing to identify and manage high-quality opportunities across the portfolio.

If you would like to learn more about upcoming investment opportunities within the Australian Securities Property Fund, our team is here to assist on 1300 275 275.