Following months of conjecture, discussion and forecast, we now have somewhat of a clearer picture of what may happen with interest rates in 2022. Any Australian that currently has a home loan and those with plans to purchase goods such as a boat with finance, will no doubt have kept across what has been discussed about interest rates. Following the RBA Board April meeting on interest rates the timing for a rate rise and how that may impact boat loans has become a little clearer.
While not unexpected, the RBA did not raise the official cash rate at the April 2022 meeting. Leaving the record low cash rate of 0.1% in place for at least another month. But there was a key difference in the tone of the statement announcing the rate decision which gives the greatest indication yet that a rise is forthcoming.
That difference was no reference to remaining patient while its targets for unemployment and inflation were reached by the RBA. While to some this may seem inconsequential, to economists and analysts it is extremely significant and indicative of a change in the Board’s intentions. In other words, expect a rate rise soon.
We have been urging prospective boat buyers to proceed with purchases with marine finance as a matter of urgency to beat the rate rise, which will come. Inflation is continuing to surge while unemployment is at the lowest rate, 4%, in decades. We now cover off on the current scenario to assist those looking to apply for boat loans.
RBA Latest Statement
The 5 April RBA Board meeting resulted in the cash rate being kept at 0.1%. In making the announcement, Governor Philip Lowe made a number of points which are worth noting:-
- The economy remained resilient.
- Business investment was increasing.
- Consumer spending was showing an upturn.
- The forecast for unemployment is for a further fall below 4% in 2022.
- Continued but gradual wage growth.
- Inflation increases due to petrol prices and prices of other commodities.
- Low lending rates remain extremely accommodative.
- Awaiting additional evidence (economic data) in coming months to consider.
The RBA states it will assess the data on inflation and on unemployment and wages growth to make future decisions.
Looking Ahead
The April decision did not surprise many. But if not now, then when is the big question being asked. The next board meeting, May, will be amidst the election campaigning. Not likely for a rate rise. The banking sector is widely reported as saying it expects the RBA to lift the cash rate at its June meeting. That would be Tuesday 7th June.
While the date for a rise is highly speculated, it should be realised that when the rise does come it could be the first of several. Yes, the RBA could increase the official rate a number of times. Whether in consecutive months is to be seen. Many analysts and banking sector tip several rate rises over 6 months in 2022.
Boat Loans and Interest Rate Increases
For those considering a boat loan to purchase a new vessel, a rise in the cash rate by the RBA will flow through to lending markets, including marine finance. But it does not mean the end to our cheaper boat loan interest rates. These issues are relative to the overall market and Jade Boat Loans will always seek the cheapest boat loan for our customers.
Any rise from the RBA will have an effect through lending sectors in general that includes marine finance. Did you know that that there hasn’t been a rise in interest rates in more than 12 years? So it’s little wonder that the prospect of rates going up and not down has attracted so much attention.
The amount of any increase is likely to be small initially. The RBA typically makes changes in small percentages. It is then the individual lenders and banks to decide how much they will vary their own lending rates. Just as we saw as rates were decreased through 2020.
If you want to get some idea what small differences in boat loan interest rates might mean in loan repayments, refer to our Boat Loan Calculator and Interest Rates Comparison chart. On the chart you can see different rates and by entering the loan amount, see how much the repayments vary with higher and lower rates. Gives you a general indication of the impact of a rate rise.
The message we have been giving for some time is act as soon as possible for purchasing new boats with finance before the impending rises in interest rates. If you can access the boat you want now, then securing finance at the current record low rates could result in a savings in boat loan repayments compared with after a rise is announced.
Contact Jade Boat Loans on 1300 000 003 to a boat loan quote
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. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MIS-PRESENTED DATA AND DETAILS HEREIN.
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