RBA Holds Cash Rate in September: What It Means for Homeowners

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The Reserve Bank of Australia (RBA) has decided to hold the cash rate steady at 3.60 per cent at its September meeting.

For many homeowners, you might hear “cash rate” and wonder: “What does this mean for my mortgage?” Let’s break it down in plain English.

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What Is the Cash Rate — and Why It Matters

• The cash rate is the interest rate that banks charge each other for very short-term (overnight) loans.
• Although your mortgage rate isn’t the same as the cash rate, changes in the cash rate influence broader interest rates — including home loans.
• When the RBA raises or lowers the cash rate, banks typically follow by adjusting variable mortgage rates (though not always fully or immediately).
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Why Did the RBA Choose to Hold?

The unanimous expectation among economists was that the RBA would pause in September. Here are the main reasons:

1. Inflation is still sticky
       Recent data show inflation creeping higher again (for example, monthly CPI rose to 3.0 % in August). The RBA needs confidence that inflation will sustainably return to its target band (2–3 %) before trimming rates further.
2. Waiting on third-quarter data
       The RBA is cautious. It wants to see full Q3 inflation and other economic data before making further decisions.
3. Strong economic indicators
       Economic growth is holding up, household spending is resilient, and the labour market, while showing some softening, remains relatively robust.
4. Signs of weakening in some areas
       Some data suggest that the case for cuts is gradually softening — the RBA may want more assurance the economy can handle looser monetary policy. The     pause is not a surprise — in fact, it reflects the RBA’s intentionally cautious approach right now.
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What This Means for Homeowners & Mortgage Holders

✅ No Immediate Relief, But Stability

Because the RBA held, there’s no immediate pressure for interest rates to fall. If you have a variable rate mortgage, you shouldn’t expect a drop in the next month. That said, this “pause” gives borrowers some certainty — there’s no new hike (for now).

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⚠️ Banks Might Not Pass Cuts Fully or Quickly

Even when the RBA does cut rates, banks may not pass the full benefit to you, or they may delay doing so. That means your mortgage rate reductions might be smaller or slower than you hope.

🔍 Consider Your Mortgage Strategy

• Refixing or switching — It may still make sense to compare fixed vs variable—and even consider refinancing—depending on your situation.
• Buffer your repayments — If your buffer or disposable income is tight, holding some extra buffer now can guard against future rate moves.
• Talk to your mortgage broker — A mortgage broker can check whether your current home loan is optimal, whether you can get a bigger discount with your current lender, re-assess your loan structure (offset accounts, redraw, etc.) or do a comparison to see if there is a better option with another lender.

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