Central banks have moved in different directions during September, but the broader pattern is clear: inflation concerns are keeping interest rates higher for longer.
The United States, New Zealand and the euro area increased their policy rates this month. Japan also announced an increase, while the United Kingdom and Canada left rates unchanged.
Australia’s cash rate remains at 4.35%, with the Reserve Bank of Australia’s next decision due on 29 September.
Global interest rates at a glance
| Economy | Policy benchmark | Current rate | Latest decision |
|---|---|---|---|
| Australia | RBA cash rate target | 4.35% | Held on 11 August. Next decision due 29 September. RBA |
| United States | Federal funds target range | 3.75% to 4.00% | Increased by 0.25 percentage points on 16 September. Federal Reserve |
| United Kingdom | Bank Rate | 3.75% | Held on 17 September. Bank of England |
| New Zealand | Official Cash Rate | 2.75% | Increased by 0.25 percentage points on 2 September. RBNZ |
| Euro area | ECB deposit facility rate | 2.50% | Increased by 0.25 percentage points, effective 16 September. ECB |
| Canada | Overnight rate target | 2.25% | Held on 2 September. Bank of Canada |
| Japan | Overnight call rate target | Around 1.25% | Increased from around 1.00%, effective 24 September. Bank of Japan |
These are central bank policy rates, not mortgage rates. The table records announced decisions and does not include forecasts.
September’s decisions at a glance
The United States, New Zealand and the euro area each increased rates by 0.25 percentage points during September.
Japan also announced a 0.25 percentage point increase, taking its overnight call rate target from around 1.00% to around 1.25%.
The United Kingdom and Canada left their policy rates unchanged.
Australia did not have a September decision at the time of writing. The RBA held the cash rate at 4.35% in August, with its next announcement scheduled for 29 September.
What does this mean for Australian borrowers?
International rate decisions provide useful context, but Australian mortgage rates are driven more directly by the RBA cash rate, wholesale funding costs, competition between lenders and individual lender pricing decisions.
For borrowers, the immediate event to watch is the RBA’s September meeting. However, you do not need to predict the next decision before reviewing your loan.
A loan review should consider:
- Your current interest rate compared with available alternatives
- Annual package fees and other ongoing costs
- Offset and redraw features
- Fixed-rate break costs
- Restrictions on additional repayments
- Your expected loan term
- Whether your financial position or property value has changed
- The total cost of refinancing, not only the advertised rate
Should you fix your home loan?
A fixed rate can provide repayment certainty, but it may also limit flexibility.
Before fixing, consider the fixed period, available offset arrangements, additional repayment limits and potential break costs. You should also consider what happens when the fixed period expires.
The lowest advertised rate is not automatically the most suitable option. Loan structure, flexibility and your expected property plans matter.
Is it worth refinancing?
Refinancing may be worthwhile if it produces a meaningful financial or structural improvement after costs.
The assessment should include the new interest rate, fees, cashback conditions, valuation, loan features and how long you expect to retain the loan. Extending the loan term may reduce the required monthly repayment, but it can increase total interest if the debt is repaid more slowly.
My view
Interest-rate decisions matter, but borrowers should avoid building their entire lending strategy around one central bank announcement.
Your loan structure should reflect your cash flow, financial buffers, repayment plans and need for flexibility.
If your loan has not been reviewed recently, assessing your current pricing and structure may identify opportunities without relying on a forecast about what the RBA will do next.
Robert
Park Road Finance
General information only. This content does not constitute personal lending, legal, tax or financial advice.