Interest rates are the main factor in pricing all types of loans and boat buyers seeking finance, either shortly or later this year, will no doubt be keeping an eye on what’s happening with interest rates in general. That will include staying across the monthly decisions on the cash rate made by the RBA Board. Interest rates on lending vary across different categories of goods and loans and across the lending sector. While individual lenders set their own rates based on their own costs of acquiring funding and their exposure to a particular market, all are determined by the official cash rate. That is the rate on overnight lending by banks and is set by the RBA.
In early 2020, the RBA cut rates as part of monetary policy to stimulate the economy. They further cut rates to the historic low level of 0.1% in November 2020. But since that time, the Australian economy has shown remarkable signs of recovery from the economic effects of the coronavirus pandemic. The low lending rates and other Government support for the housing market have seen house prices soar in 2021. A scenario that some analysts suggest the RBA should address with a rate increase.
The RBA has repeatedly stated it was looking for key targets in inflation and unemployment figures before lifting rates. With these figures continuing to post positive results, all eyes were again on the RBA on the first Tuesday in June.
RBA’s June Announcement
With calls by some to lift rates to cool the housing market the RBA remained steadfast and in line with its previously-stated intentions and left the cash rate on hold at 0.1% at its 4 June 2021 board meeting. In the statement issued with the announcement, the RBA Governor Philip Lowe noted the continuing improvements in the global economy as well as in Australia. Noting however that growth was uneven as some countries were experiencing continued outbreaks of the virus. Virus outbreaks he said, was also a source of uncertainty for the Australian economy but increasing numbers of vaccinations would diminish that uncertainty.
Dr Lowe said it would be expected that unemployment, reported at 5.5% in April, would drop to around 5% by the end of 2021 though labour shortages were being experienced in some sectors. He said that despite the good growth and unemployment figures, inflation and growth in wages remained subdued and only a gradual and modest pick-up is expected.
The announcement noted that the RBA would be monitoring the trends in home loan borrowings in the low-interest rate and high house price environment.
In regard to inflation figures, Dr Lowe reiterated earlier statements that the RBA would not lift the official cash rate until the actual inflation rate was in the range of 2-3% and it was supporting a return to full employment. A rate rise may not come until 2024.
Interest Rates: Marine Lending Market
The cash rate in Australia is one factor in determining the interest rates available across the lending market. Some lenders source funds from global sectors with higher interest rates. There has been discussion and opinion raised in the financial media that, with an eye on these global rates, some lenders may increase their rates prior to the RBA lifting the official cash rate.
However, in reality, lenders will want to remain competitive especially in a boating market that is experiencing an uptick in sales over the past year. If international borders do remain closed into 2022 as stated by the Federal Government in the May budget, it could be expected that even more Australians will opt to buy a boat as an alternative to overseas holiday travel. Further fuelling demand for boats and for boat finance.
Jade Boat Loans strategically offsets interest rate variations across the marine finance sector through our multiple accreditations and strong bargaining power. We are accredited with many banks and lenders so we have more options and a wider field from which to source the cheapest boat loan offers so we can continue to remain highly competitive with the cheapest interest rate boat loans. Refer to our Boat Loan Lender Comparison Table for the current rates across a selection of the boat loan market.
Interest Rates: Boat Loans
For existing boat loan holders with a fixed interest rate loan, the loan is not affected by any changes in the cash rate or general interest rates over the term of the loan. We arrange fixed interest rate boat loans that remain the same over the full term of the loan. Once locked in at our low rate, our customers enjoy that low rate for the full, up to 7-year loan term.
Variable interest rate loans can apply to our unsecured personal boat loans. The rate on unsecured loans can be fixed or variable. A variable-rate may change if official rates move. At this point in time, RBA is not expecting rates to increase until 2023 or even 2024. But if considering a 7-year boat loan term, 23/24 would be a mid-loan term. Secured Boat Loans are the most popular and widely-used loans and these typically include a fixed rate.
New boat loans are priced by the quote and determined by the interest rate applicable at the time of application. Currently, that would be at our current low rates.
Secure a fixed interest rate boat loan at the cheapest interest rate achievable for your loan application with Jade Boat Loans and ensure you enjoy a low interest rate over the entire term of your loan.
To discuss marine lending at the current low-interest rates, contact us on 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. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.