The markets were bracing for a 0.5% cash rate rise by the RBA Board at its October meeting. But the Board delivered an outcome which was less than expected by many at 0.25%. While not as high as many were expecting, the 0.25% October cash rate rise will impact lender markets including boat loans. Boat buyers requiring finance as interest rates rise can look to Jade Boat Loans for better rates and cheaper marine finance on all types of boats.
For buyers looking to purchase at a later date, taking note of the information in the RBA Board’s monthly statements can be helpful. The statement, issued by the RBA Governor Philip Lowe, includes the rationale behind the current Board decisions plus their viewpoint on the economy and indications of future decisions. Information which may assist buyers to shape buying plans in regard to the price of the boat to purchase and when that purchase should be made to achieve the most affordable finance.
Statement by RBA Board – October
The RBA Board met on Tuesday October 4 and issued the announcement of the cash rate decision that afternoon. The decision was to raise the rate by 0.25% to 2.6%. The Board repeated the commitment made in statements over several months, of returning Australia’s inflation to its target area of around 2-3%.
A slim path has been identified to achieve this goal and while keeping the economy steady due to uncertainties in both the global and domestic environment. The Board noted in the opening part of the statement that rates have been increased ‘substantially’ in just a short space of time.
Points to note in the October RBA statement:-
- Australia’s inflation rate, while not as high as in many other countries, is considered at too high a level.
- Global issues around supply and other factors are identified as a major contributor to this rate. But strong domestic demand while supply is still constrained, is also a key contributing factor.
- Inflation is expected to further increase to around 7.75% before the end of this year. A fall to slightly about 4% is expected in 2023. By 2024, the Board states that inflation should approaching that key target amount of 3%.
- The national income is being boosted by record levels in the terms of trade and the economy is continuing its solid growth.
- The unemployment level continues to reflect the tight labour conditions. A large amount of job ads shows that businesses are seeking to fill positions. As the global supply situation starts to resolve, it is expected that unemployment will rise, but a further fall is expected before that rise.
- The price-setting practices of businesses is attracting scrutiny from the RBA in relation to labour costs. It notes the importance of stability in prices to ensure strength in the economy.
- Uncertainty is seen in regard to the economic conditions globally especially due to the recent deteriorating environment.
- Uncertainty persists in regard to the way domestic spending patterns react to increased rates as they place pressure on household budgets with higher inflation.
Further increases in interest rates are to be expected, according to the RBA Board, in coming times. The Board’s next meeting is Tuesday November 1. Whether or not the Board decides on another rise at that time, we’ll have to see.
There is extensive commentary from analysts for the Board to ease-off on the rate rises with the fear of global recession looming. The Treasurer, Jim Chalmers, has said recently that there is an increased possibility of a recession on a global basis.
Boat Loan Interest Rates Prospects
The repercussions from a rise in the cash rate by the RBA are felt across the lending markets. It will be up to the individual banks, finance companies and other non-bank lenders as to how much they will raise their rates and when they make that change.
In the days after the October rate decision, the major banks and Macquarie Bank all lifted the rates on their variable rate loans. Other changes would be expected. This highlights the necessity for boat buyers requiring finance to look closely at many loan sources and options to ensure they are achieving the cheapest rate available.
It is also important to ensure the boat loan has a fixed interest rate, such is available on our Secured Boat Loan, so the rate remains stable and does not increase with cash rate rises.
We can assist boat buyers with achieving better rates faster with our access to a wider selection of lenders. But the message is very clear, move as quickly as possible as further rises are highly expected as indicated by the RBA.
Contact Jade Boat Loans on 1300 000 003 to discuss boat loan options
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.
