Coming into a major boat buying season, potential buyers may be having a rethink due to the impacts on boat loans of the latest boat loans interest rate rise. Ideal buying opportunities are ahead with the Sanctuary Cove Boat Show later this month and the Sydney Boat Show a few months later.
Many serious buyers will no doubt already be reviewing their boat loan options, especially considering what is happening and what will happen with boat loans interest rates.
Following the April rate pause and the fall in inflation in the March quarter, as released by the Australian Bureau of Statistics (ABS), there were strong expectations from the financial sector for another rate hold in May. But in what is being described as a surprise move, the Board of the Reserve Bank (RBA) announced a further 0.25% rate rise at its meeting on 2 May.
The key to the decision is services inflation persisting at a high rate despite some easing in goods inflation. At 7%, inflation is well above the RBA’s 2-3% target. According to RBA Governor Philip Lowe, inflation is expected to reach 3% by mid-2025. Dr. Lowe noted the timeframe is too long and warranted different interest rates rise at this time.
As will be the case in most lending markets, this decision will impact marine finance as lenders adjust their rates accordingly. But buyers seeking boat loans can be assured that Jade Boat Loans will continue to source the cheapest rates for our customers.
RBA Key Points – May Rate Decision
The key point in the May rate decision announcement is the need to return the inflation rate to the target faster. 4.5% this year and 3% in 2025 is too long a time, according to the RBA Board.
The May statement again mentioned the negative outcomes of high inflation becoming entrenched. These include the harm to many people and the need for even larger rates at a later time, and unemployment rises.
Additional key points: -
- Inflation in goods prices is easing, but services sectors remain too high.
- Labour costs are rising but subdued productivity growth.
- Wages growth is on track with the inflation target, provided productivity increases.
- The Board remains alert to the risk of the price-wage spiral as price increases followed by wage rises.
- The board’s priority is to return inflation to target while maintaining an even keel for the economy, with the narrow path to achieving this still present.
- Below-trend economic growth is expected – at 1.25% in 2023 and 2% by mid-2025.
- With the slowdown in household consumption due to high rates, households feel the pressure of higher living costs.
- Uncertainties around consumption and global economic issues.
- Further interest rate rises might be required to reduce inflation quickly.
Dr. Lowe gave a speech at the Reserve Bank Dinner on the night of the latest rate announcement, elaborating on several points. Dr. Lowe said energy prices and prices in several service areas – healthcare, education, and hospitality remained exceptionally high.
Dr. Lowe said that the April pause allowed the Board additional time to receive and assess
further data. Now that data has been obtained, it was judged that a further rate rise was required to reduce inflation in a reasonable time while preserving the gains realized in the labor market. Dr. Lowe said Australia took longer than some other countries to reduce inflation to maintain the progress already made with employment.
The media release announcing the RBA’s monthly rate decision is always brief, and Dr. Lowe’s dinner remarks provide further information on the Board’sBoard’s thinking. A lot more detail will come to hand when the minutes of this meeting are available on 16 May.
Boat Loan Impacts
As mentioned above, there will inevitably be lenders that will increase their marine finance interest rates due to the increase in the cash rate. Some might have already priced a further rate rise into their rates if that was the forecast of their analysts.
With many banks and lenders available, we are ideally placed to secure the cheapest Boat Loan interest rates and boat loans to meet individual customer requirements.
The latest rate rise will not impact those with a current fixed-rate boat loan or those with a confirmed pre-approved offer. Those with pre-approved loans commit to the offer before the expiry date. Boat loan applications currently in the approval process would be quoted on the current rates when an offer is made.
Buyers seeking approval before upcoming boat shows can contact us for a quote. Our pre-approved boat loans are obligation-free. If the buyer does not proceed with a purchase, the loan simply expires. To start the planning process with current interest rates, use our boat finance calculator.
To secure cheaper loans following the RBA interest rates rise, contact Jade Boat Loans at 1300 000 003
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED REGARDING ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.
