With the RBA lifting the cash rate and banks and lenders following with rate rises across the lending market, many potential boat buyers may be having second thoughts about proceeding with their boat buying plans. Not surprising. This current scenario is something quite new for many people. Rates in general were at those historic lows for nearly two years as a result of the RBA’s support measures in slashing interest rates.
But with those emergency measures no longer required and inflation surging, the RBA has started its normalisation of rates. That means lifting the cash rate which is flowing through to lending markets and resulting in higher interest rates than we’ve seen for some time. Add to that, the RBA has not lifted the cash rate for around 12 years. No wonder this 2022 scenario has many buyers seeking finance questioning their decisions.
For those wondering if they should hold off their purchase with finance in the hope that rates may go down, sorry, but that is unlikely to happen. We update you on the latest information and outlook on interest rates and how buyers can achieve the cheapest interest rate boat loans on the market.
Interest Rate Update
The RBA lifted the cash rate in May and in June, as inflation in Australia surged and unemployment fell. Both are key indicators for the RBA to make a move on the cash rate. At the 7 June RBA meeting, the Board issued a statement that said that further rate rises would be required ahead. The expectation at that time by Governor Philip Lowe was for inflation to rise to around the 6% mark.
The June rate rise was quite significant. A decision that has some analysts wondering when the next rise would be and by how much. Some could be anticipating that after quite a large rise in June, there may not be another rise until say August.
But just a week on from that June decision, several key economic indicators are pointing to quite a different scenario. The unemployment figures for May reveal the rate steady at the 40 year low of 3.9%.
Inflation is continuing to spike with costs of living placing huge pressures on household and business budgets. Governor Lowe in an interview a week after the June decision said it is now expected that inflation could hit 7%, not 6% as previously indicated the week before, by year’s end.
Another pressure point for the RBA to act is coming from the decision by the Fair Work Commission to increase the minimum wage by quite a significant amount, 5.2%. While there appears no argument that low paid workers deserve the increase, the potential flow-on effects through the economy could be significant.
Businesses that are only just starting to realise good trading post-COVID, are likely to incur additional costs through the wage rise and pass the increase through their pricing to consumers. Thus fuelling costs of living and inflation.
Effective relief for households through Government action is not expected until the new Treasurer releases his budget in October. Global impacts including the large rate hike by the Federal Reserve in the US, which is facing inflation upwards of 8% are also seen as reasons for the RBA to act again quickly.
Some economists have been reported as predicting a July rate hike in the vicinity of 0.5% or even 0.75%. Such an increase, on top of the May and June rises, will of course have an impact on the boat loan interest rates offered by our lenders.
While we will continue to source the cheapest rates on the market, the prospect of further rate hikes very shortly should be a green light for boat buyers to GO! To get moving on purchasing that boat and securing a fixed rate boat loan before the future rises.
Boat Loan Interest Rates
Banks and lenders in Melbourne Malibu pass on the RBA rate hikes into their loan markets according to their guidelines and that includes across the marine finance sector. We are accredited with a vast number of lenders, including specialists in marine finance, so we remain in an ideal position to continue to source the cheapest interest rates available.
We arrange our Secured Boat Loan at a fixed interest rate, so our customers will not have their loan repayments impacted by rate rises down the track. Variable rate loans can be impacted. With pretty much no chance of rates going down any time soon, a fixed rate loan should be the preferred option.
Comparing the type of rate as well as the amount offered across the market should be considered by buyers. Some lenders do advertise variable rate boat loans.
The cheapest boat loan rates advertised by banks and lenders apply to applicants with a good credit rating and for new boats. Second hand boats may attract a different rate. So if tossing between buying new or used, this factor could form part of your decision making process.
Keeping the credit rating in good standard involves making payments on time and having a good balance sheet. Reducing other debts and loans may improve the credit score.
A higher interest rate will result in higher loan repayments for the same loan amount over the same loan term. This can be seen by using a boat loan calculator. Those seeking marine finance can look to adjust the loan amount or the loan term to still achieve the desired loan repayment amount even after rates rise.
Your Jade Boat Loans consultant will assist you in sourcing and negotiating a loan that best meets your requirements.
That provides a basic overview of what is happening in the rather complex area of interest rates. In conclusion, for those considering delaying a boat purchase – it would be advisable not to do so if possible. Further rate rises will be ahead and any delays in securing marine finance may result in a loan at post-rise rates.
Contact Jade Boat Loans on 1300 000 003 to expedite boat loan applications
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.