It's the question on everybody's lips now that interest rates have started going up: should I fix my mortgage?

The answer is no – and certainly not all of it. Here's why.

When you fix your rate, you're essentially betting that you know better than your bank the future direction of interest rates – and they have teams of economists and strategists calculating these things.

Unfortunately, banks have seen this rise coming from a mile away (or else they've just been keen for a bit of extra profit – you be the judge). They've been steadily raising fixed rates for some nine months already.

So if the prospect of paying an extra $46 a month on a $300,000 variable mortgage has you thinking of locking in, be aware that fixing for three years today would cause your repayments to instantly leap $351.

While the average standard variable rate after last week's rise is still only about 5.5 per cent, infochoice says the average three-year fix is already 7.14 per cent.

Sure, variable rates will probably get to 7.14 per cent in the next three years but not soon. And to come out ahead with such an expensive fix, you require them to get there quickly and keep going far beyond.

In fact, modelling by Canstar Cannex shows you actually need the variable rate to surpass 11 per cent by the beginning of the third year to make up for the excess repayments you will make in the beginning.

Which brings me to the second reason not to fix. When you do so, your higher outlay goes not to you as chunks off your principal but to your bank as interest payments. You lose the ability to take advantage, through extra repayments, of interest rates that are still at generational lows – but you are out of pocket anyway.

Staying variable and paying that same amount extra would slash your total loan interest rather than upping your bank's.

Yes, rates are now on the increase – and unexpectedly strong employment numbers could mean that happens a little faster than some expected – but we are still a full 4 percentage points below the level of only a little more than a year ago.

As the Government's been quick to point out, that equates to a saving of some $700 a month on a $300,000 mortgage. If you keep throwing this amount on your mortgage – and, hypothetically speaking, rates freeze where they are for the remainder of it – that would save you $121,000 in interest.

But making the most of such a dramatic rate discount that lasts for even a year or two could see you ahead by tens of thousands of dollars. Remember: every extra dollar you repay is a dollar on which you will never again pay interest and paying extra is much easier to do when rates are low.

If you're truly worried about your ability to meet higher repayments, you might consider fixing a maximum of half your mortgage. This way you have some repayment certainty but also a variable component that would benefit if rate rises are slower and smaller than forecast.

Just bear in mind research by Merrill Lynch that shows consumers on the variable interest rate have come out ahead of those on a three-year fix in 83 per cent of cases during the past two decades.

Meanwhile, we are still looking at the best opportunity to repay debt in four decades. If you stay variable and pay extra, you can use it to your advantage.