Stay Variable or Fix my Home Loan Rate?

This is the most commonly asked question today regarding home loans… If we look at the average 3 year fixed rate at 6.79% (loans over $250,000 receiving a 20pt discount) and then the current average discounted variable rate at 5.11% for P&I payments for a loan of $250,000, the variable monthly repayment would be $1360 approx. The fixed monthly repayment would be $1630 approx. Therefore, an extra $270 is required.
Often the question then arises if the extra payment is better off used in the principal payment? An option then could be to pay the higher amount (3 year fixed rate payment) and leave the loan on a variable rate. The principal balance should then be reduced and also provide additional funds in redraw. At the end of 3 years with the interest rate rises being chronologically consistent, the variable rate would need to be 8.4% approx (monthly/annual fees have not been included).